EXECUTOR sales now represent a large percentage of transactions in the market. In previous eras, people trading up and down and after marriage break-ups represented a much larger proportion of sellers but in the current economic circumstances, such vendors are postponing selling.
Disposing of a family home can be an emotionally charged affair. When a person dies, the duty of carrying out the terms of their will falls to their executors. Usually, but not essentially, there are two executors, and once there is a will, the executors must obtain a grant of probate.
This basically entails getting the probate office or the relevant district probate registry to certify that the will is valid, and that all legal, financial and taxation matters are in order. Once received, it allows the executor to proceed with the duties of distributing the estate.
One of the first decisions an executor must make is whether or not to engage the services of a solicitor to get a grant of probate. It has become common practice in recent years for executors to carry out this task themselves without engaging the services of a solicitor. From our experience, unless an estate is very straightforward and will not ultimately involve the disposal of a property, the advantages of engaging the services of a solicitor far outweigh the financial benefits of not using one.
Additionally, we have found that it normally takes a private individual longer to get the grant of probate than a solicitor.
When an estate contains property, it is critical to remember that the process of selling that property can begin before a grant of probate is in place.
Executors commonly make the mistake of waiting until everything is ready before putting the property on the market. This is not an issue in a rising market, but in a market such as the one we are in now, it can be very costly, particularly given that one of the key responsibilities of the executor is to preserve the value of the deceased’s assets until such time as they can be distributed.
The fact is a property can be put up for sale, offers received and indeed a sale agreed prior to probate being granted, although a sale cannot close until a grant of probate has been obtained. Problems can arise if there are delays in engaging the probate office, which is where a solicitor is invaluable. On two occasions recently, we had sales agreed on properties and the solicitors were able to expedite the grant of probate. This meant that the sales could proceed quickly and smoothly.
In the current climate, delays in obtaining probate and disposing of properties can result in a significant depreciation in values. We recently met the executors of a property who had spent eight months personally dealing with the probate. At the start of the process in February, the value of the property was about €270,000, but now the property’s value is in the region of €220,000 – that’s €50,000, or 18.5 per cent, lost due to probate delays.
The duties of an executor are clearly outlined in legislation, from representing the deceased in legal actions to paying debts or taxes owed and protecting the assets prior to disposal. However, what is not covered is the minefield of emotions executors have to deal with in trying to carry out their duties and engage with beneficiaries.
The disposal of a family home in particular is an emotionally charged affair. People are understandably sensitive and it is not uncommon for them to react to some offers as if somebody had personally insulted them.
Executors commonly say “we are under no pressure to sell”. Often what that actually means is that the beneficiaries and the executors are not collectively ready to make a decision. The price of this indecision can be very costly, particularly in the present market. In one extreme case we were involved in recently, a family refused an offer of €1,700,000 as they were not ready to let go. Eighteen months later, they ended up accepting an offer of €800,000.
It may sound harsh, but it is better to deal with the property assets quickly.
Article contributed by Darren Chambers, who is responsible for probate valuations and is manager of Lisney’s Drumcondra office