Hello, my name is Jade Smith and I am a Business Relationship Manager at Equilaw. Today I am joined by Malcolm Emery of Legal Studio Solicitors who specialises in tax, trust, and probate matters.
In today’s podcast Malcolm is going to discuss the issues that can arise if an inherited property is still owned by the deceased when the new owner applies for equity release.
Q – So Malcolm, before an equity release can proceed the applicant must own the property. We often come across situations where the applicant has inherited the property, but the legal title is still held in the deceased owner’s name. Could you please explain what process needs to take place to transfer the property into the applicant’s name?
A – Yes, the executors of the deceased owner’s estate must assent the property into the new owner’s name. An assent describes the process of transferring ownership of a property from the deceased owner to the new owner.
Q – Great, is an assent always needed?
A – Not always. If the new owner is also a co-owner of the property along with the deceased, then an assent is not needed. In these types of cases the deceased owner’s name can be removed by the co-owner submitting the deceased owner’s death certificate to the Land Registry together with a form DJP.
Q –Great, so do the executors require authority from anyone before they can assent a property into the beneficiary’s name?
A- Yes, it is necessary for the executors to obtain a grant of probate or letters of administration from the probate registry. This is the personal representative’s authority to be able to deal with the deceased’s estate.
Q- Malcolm, you referred to a grant of probate and also letters of administration. Could you please explain the difference between the two documents?
A – Essentially both documents do the same job, which is to allow the personal representatives to deal with the administration of the deceased’s estate. An application would be made for a grant of probate where the deceased left a valid Will, whilst an application for letters of administration would be made if the deceased died without leaving a valid Will.
Q- Thank you that is helpful. If an application has not been made for a grant of probate or letters of administration is this easy to do and how long does it take?
A- The government has recognised that the process of applying for grants of probate/ letters of administration by post can be time consuming and so most applications can now be made online. This involves the executors answering several questions about themselves and the deceased. The executors will then need to sign a document called a legal statement which basically confirms that they have the relevant authority to apply for the grant. Once the legal statement has been signed by the executors the legal statement can be submitted online to the Probate Registry.
In addition, the executors will need to file an inheritance tax return providing details of the deceased’s assets and liabilities. The inheritance tax account is needed to determine whether there is any liability to inheritance tax on the deceased’s estate. The account is submitted to HMRC if there is an IHT liability otherwise it is sent directly to the Probate Registry.
If the application for probate is made online and there is no IHT liability it will usually take the Probate Registry around 4 weeks to issue the grant. If the deceased’s estate does have an IHT liability the Probate Registry will take between 4 to 8 weeks to issue the grant, once the IHT liability has been paid.
Q- Great, so last question for you Malcolm, I am aware that an assent is usually for no value. What happens if a beneficiary is paying money to the estate so that he/she can take ownership of the property?
A – In this type of situation we are dealing with a purchase rather than an assent of the property. An assent would not be appropriate if money is being paid to the estate because an assent is essentially a gift from the estate.
So, let’s suppose that Bill is leaving his estate to Ben which includes a property worth £150,000. The estate has debts of £20,000. The executors have two choices. They can either sell the property, pay off the debt and pay over the balance of the estate to Ben. Or, they could ask Ben to pay £20,000 into the estate to settle the liabilities and then the executors can transfer the property to Ben.
Thank you Malcolm, that example was very helpful. We are often asked many questions around inherited properties, so I am sure our listeners today will find this information really beneficial.
Thank you for everyone listening, we have more specialist podcasts in our series with Malcolm all available to download and listen to today.
