More often than not, estates and wills are handled by solicitors. For this reason alone, many of us do not understand how to proceed. So when suddenly faced with taking on a loved one’s property, it can seem like a mine field. Naturally, we’re inclined to worry, not wanting our family’s possessions and accumulated wealth to decrease or be lost. That’s why we’ve put together this guide to inheriting a property, which answers some of the more common questions people have in this situation.
The following article is aimed at answering some of your initial questions, but you should consider gaining professional advice to fully understand about which options are most suited to your personal circumstance.
How long do I have to make my decisions?
Following the death of a loved one, having to think about tax, debt, property and money may be the last thing you want to think about. The truth is, a property doesn’t have to be dealt with immediately and most banks or lenders are sympathetic to your situation. Inheritance tax doesn’t have to be paid for up to 12 months and most mortgages have a period of grace while you make your arrangements. Don’t be afraid to speak with lenders themselves either. They are not there to work against you in such situations. Until the will is executed and you officially take on ownership, there is no one to collect from anyway, so it is in their best interest to align with yours at this point.
What are the long-term options when inheriting a house?
The three realistic options for most of us are: to sell; to rent; or to move in. Each option has different factors to take into consideration and which you choose may depend greatly on individual circumstances, such as if the property is inherited with a mortgage. Renting out the property may create additional income for the landlord, or create an income to continue paying the mortgage. Selling provides an immediate lump sum, and is therefore a common choice when the estate is being divided between people.
Who makes decisions about the estate and property?
Usually a will names an executor as the person who oversees the distribution and/or sale of the estate. This executor could be a solicitor, child, sibling, friend or other family member. They are responsible for ensuring the payment of any taxes, clearing any debts and distributing the estate to the beneficiaries as stated in the will.
If there is no will, or a living spouse or civil partner, the entitlement falls to children of the recently deceased.
The property has a mortgage; do I still have to pay it?
If there is no life insurance to pay off the mortgage on the property this responsibility passes to the inheritor(s) along with the property itself. If you inherit the mortgaged property, but plan on keeping it to live in or rent out, you will need to continue to make these payments once the property is registered to you. Your other option is to sell the property. This usually generates enough funds to pay off the mortgage – and what’s left will be shared amongst the beneficiaries.
Do I have to pay the mortgage payments myself right away?
Assuming that the mortgage was not covered by a life assurance policy, you should check the terms of the mortgage to see what it says about payment in the event of death. Often, interest and payments will be frozen until the grant of representation is obtained. The general rule is that the debt is payable out of the sale proceeds of the property which is mortgaged.
What to do if there is no will
If a family member has passed away with no spouse and no will you’ll want to apply to get a ‘grant of representation’ to access their bank account. This is also known as a probate. This will give you access to the deceased’s funds to pay for funeral arrangements and to take control of assets to arrange for sale or sharing amongst beneficiaries - as well as paying inheritance tax and any other related outgoings.
The inherited property currently has tenants, what should I do?
In the first instance, you should ask yourself whether you would like them to remain tenants. If you want the property emptied then you should check the terms of their rental contract, and draw up a new contract/amend the existing one accordingly.Error loading MacroEngine script (file: [Razor]Gallery.cshtml)