I bought a second home in Hull for £38,000 for which I paid 100 per cent of the purchase price with my friend, then seriously ill. We bought the property as tenants in common rather than in joint ownership, as was my intention. My friend died in 2001 with no will or known heirs. As I often worked abroad, I never got probate. The house was left empty.
Now, aged 78, I am anxious to sell up but can’t, as getting probate is too complicated. I am also being charged double council tax on an empty property. How do I get probate in the light of this and finally gain closure?
Andrew Reay, probate manager at law firm Harbottle and Lewis, says there is a distinction between “legal” and “beneficial” ownership which is important here. Legal ownership refers to the name on the title register at HM Land Registry. Beneficial ownership refers to the true underlying ownership, which is not registered at HM Land Registry.
The position in relation to legal ownership of the property is clear: you and your friend were the joint legal owners, as you intended. Following the death of your friend, the legal title is automatically transferred to you by the law of survivorship, and now vests in you alone. You can apply to correct the legal title at HM Land Registry, in other words, to remove your friend’s name, simply by submitting a copy of his death certificate.
Once the legal title to the property has been updated, you could then sell the property. Where you hold a property as tenants in common, HM Land Registry places a restriction on the title register requiring there to be two sellers. This is to protect the beneficial owners as the two sellers can hold each other to account in dealing with the sale funds properly. You will therefore need to appoint another person, of your choosing, to be your co-seller. Upon the sale, by you and your co-seller, you will “overreach” any beneficial interest that your friend’s estate has in the property.
This means that instead of holding a percentage share of the property, your friend’s estate will own an equivalent percentage interest in the sale proceeds. You will then hold his proportion of the sale proceeds on trust for his estate. The sale would at least mean that you would no longer be liable for the ongoing property expenses.
This does not necessarily resolve the issue as to the identity of the beneficial, or equitable, owner in the property, however. I note that you paid all of the purchase price, and subject to your intentions at the time, you may therefore have a “resulting trust” claim over all of the beneficial ownership.
However, you also elected to be tenants in common, which suggests you probably intended to give at least some of the beneficial ownership to your friend. As you may know, a tenancy in common means each beneficial owner holds a discrete share in the property (rather than holding all of the property, together, as is the case with joint tenancies).
I have predicated the rest of my answer on the assumption that, at the time you purchased the property, you did intend to make a gift of a share in the beneficial ownership (as well as the legal title). The amount of this share will depend on what you intended at the time you made the gift to him although, if you did not enter into a declaration of trust or otherwise document the proportions in which you wanted to hold the beneficial interest, this will be difficult to evidence.
The person to whom you should pay the sale proceeds will be the administrator of his estate. You say he has no known heirs. A practical solution might be to speak to a professional genealogist or heir hunter and explain that you hold an asset for the benefit of your friend’s estate. The heir hunter will then undertake their family tree work. This is usually at no cost to you; their fee will ordinarily be paid by the beneficiaries, once found.
Any heirs who are located will be able to take out the grant of letters of administration, at which point you can pay them the funds the estate is owed. If the heir hunters are unable to find an heir, your friend’s proportion of the sale proceeds will be payable to the Crown.
Can we challenge my aunt’s will?
My wealthy aunt recently died at her home in London, leaving property assets there and in Switzerland, plus a number of bank accounts in each jurisdiction, various overseas trusts and share portfolios. Her former nurse has produced the latest copy of my aunt’s will and she is a beneficiary to a larger extent than the family realised. We are concerned about the possibility it was changed recently. What should we do?
Laura Phillips, legal director at law firm Kingsley Napley, recommends investigating the preparation and execution of your aunt’s will. For example, try to find out if it was prepared by a solicitor or will writer (the information would usually be found somewhere on the will).
If so, try to obtain the will file containing attendance notes or instructions as to why your aunt made the decisions and legacies that she did. This may also show whether the nurse was present when instructions were given. If the will is homemade (in other words, no independent person was instructed to assist), try to gather information about your aunt’s demeanour and health when the will was made.
If you have suspicions about the nurse’s influence over your aunt, there are ways a will could be challenged in England and Wales.
The first consideration is whether your aunt had a condition which may have affected her mental capacity, such as dementia. In order to make a will, a person must have testamentary capacity. Even if someone has a diagnosis of cognitive illness, however, this does not automatically mean they lack testamentary capacity. It will require a detailed review of the medical evidence and other contemporaneous documents to assess this.
It is also possible that, even if your aunt did not suffer from such a condition, she may not have known and approved the entire contents of her will. For a will to be valid, the testator must be aware of its contents including all the details, however complex and whichever gifts are specified.
Finally, you should consider whether your aunt may have been unduly influenced or coerced by her nurse. Undue influence claims are quite often pleaded but are very difficult to prove because the person who could give evidence that they were being coerced is the deceased themselves. However, consideration can be given to contemporaneous documents such as medical records, diary entries and the recollections of other people who were close to your aunt who may have had suspicions.
Our next question
HMRC has decided that my business owes a large amount of additional tax. I don’t agree, and so have not paid, and now it has served a statutory demand for payment on the company. What does this mean, and what should I do about it?
The assets held in overseas trusts will not pass under your aunt’s will and so you would need to consider the trust documents or contact the trustees to establish who the beneficiaries of any trust assets are following her passing.
Given your aunt also had assets in Switzerland, you should obtain advice from a lawyer there to establish how the will (and any challenge to its validity) would be treated under Swiss law.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to [email protected].