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Buachaill, Barrister
Category: Law
Satisfied Customers: 10976
Experience:  Barrister 17 years experience
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I am a non professional executor of an estate that consists

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I am a non professional executor of an estate that consists largely of a single property (approx. Value £450k) there was no will, hence the estate after taxes etc is to be distributed to myself and two siblings in equal shares.
The IHT bill of £150k was scheduled to be paid over 10 years as it required the sale of the property to make payments.
After 7 years due to a number of issues, not least of which has been emotional attachment the property is still not sold and I have been trying to meet the schedule of payments from money outside of the estate, but have fell behind.
I have paid in the region of £40k, there are still 3 scheduled payments to make, but I am effectively £70k behind.
The Sale of the property is now moving along but may take another year, I am looking at meeting some of the arrears by remortgaging my own house, but this will still leave a gap.
My main concern is not how to ensure I am not out of pocket in the longer term (ie personal payments instead of Estate), but really how to approach this with the Inland Revenue.
Re-mortgaging and then still owing arrears may get me no great understanding, Would the revenue be open to taking a partial payment from me and renegotiating the schedule or would they force a firesale of the property.
They have a charge over the property so know that eventually the debt will be covered.
Any advice would be appreciated.
1. Two points strike me immediately here. Firstly, the Revenue will take a commercial approach to the payment of the monies here, as ultimately, they are ensured of payment, as they hold a secured charge over the property here. So the issue is not one whether the Revenue will get payment, but whether you will keep to your Schedule of Repayments. HOwever, the Revenue will insist on all necessary efforts being taken to ensure you keep to your payment plan.
2. Secondly, there is considerable equity in the property. So, there is an obvious case here to take out a second charge over the property to meet the payments Schedule. The three siblings will probably all have to join in this charging of the property, but it will ensure payments are met. The Revenue will most likely insist on this course of action. any financial institution would be reducing the Revenue charge as it advanced monies to cover the payments.
3. I would also suggest that you are very foolish in remortgaging your house to meet the payments schedule. This is not the way to address the issue. Instead use the property that is the source of the liability to meet the payments obligations. Don't be burdening yourself with this.
Customer: replied 2 years ago.

Your answer has been very helpful and the second charge against the property giving rise to the IHT makes sense.

How does that work in practice ? in effect the first charge I think guarantees the IR get the the full IHT payments before any sale proceeds upon sale of the property.

Does a second charge mean borrowing the IHT value against the property from a financial instution (ie a bank), in effect mortgaging the property to clear the IHT ahead of a Sale, which would take the pressure of getting a Sale concluded?

4. Yes, the loan from the financial institution would take the pressure off getting a sale through. Be aware that lenders very often take second charges. Here, you just make an application as executor, or if the property is in the names of the three siblings, you combine to do so. The loan then pays off the Revenue and you just have a normal charge securing the loan as a second charge on the property.
Customer: replied 2 years ago.

Last question

The property is still registered to the deceased, do I have to transfer to myself or 3 siblings or is there usually a way to apply as sole Executor of the asset.

5. BAnks are most comfortable lending to the actual three owners. It is simpler. They understand that these are the three owners. If you seek to apply as executor and the asset in the name of the deceased, they will not lend to a dead person. So convey the property to the names of you three siblings.
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