Wills and beneficiaries.

[Drawweight]

A couple of queries.

My FiL had died leaving his house to his 3 children and cash sums to his grandchildren. My wife and one brother are executors. However there is no money to pay the cash sums. The plan is to sell the house and use the funds pay the grandchildren then the remainder goes between the 3 children. This is going to be done nevertheless but if there was no cash spare to pay the grandchildren at the time he died then did that bequest really die with him?

There is a chance that one of the benefactors to the house may try and buy the other 2 out as the house has got tenants in and he has a small rental portfolio so this would fit in with his plans.
What’s the best way to value the house? Get some valuations and average them out or take the highest? And how many would you get in? It’s just an ex council house so not worth a great deal.

[Riley Blue]

Drawweight said:

What’s the best way to value the house? Get some valuations and average them out or take the highest? And how many would you get in? It’s just an ex council house so not worth a great deal.

That's what we did after my Dad died. One of my sisters and her husband were executors. They had the house valued but my other sister and I asked for three valuations and we all agreed on the highest.

In the end my sister (the executor) bought the house and now lives there.

[anonymous-user]

Surely the cash comes out if the estate (when house is sold)
So if the house is worth say 200k
Suppose 50k cash for the family members.
The remainder shared between the 3 beneficiaries
It’ll cost 100k to buy them out what is left ?
50k each to the other 2

Edited by anonymous-user on Tuesday 26th May 11:36

[Sheepshanks]

Drawweight said:

This is going to be done nevertheless but if there was no cash spare to pay the grandchildren at the time he died then did that bequest really die with him?

I suppose it depends on exactly how the Will is worded.

[zzrman]

Drawweight said:

A couple of queries.

My FiL had died leaving his house to his 3 children and cash sums to his grandchildren. My wife and one brother are executors. However there is no money to pay the cash sums. The plan is to sell the house and use the funds pay the grandchildren then the remainder goes between the 3 children. This is going to be done nevertheless but if there was no cash spare to pay the grandchildren at the time he died then did that bequest really die with him?

There is a chance that one of the benefactors to the house may try and buy the other 2 out as the house has got tenants in and he has a small rental portfolio so this would fit in with his plans.
What’s the best way to value the house? Get some valuations and average them out or take the highest? And how many would you get in? It’s just an ex council house so not worth a great deal.

The terms of the will i.e. the exact wording, are what matters.

On the face of what you say the house is willed to the 3 children, presumably in equal shares so if the house is worth, say. £150k the value of each child's share is worth £50k. If one of the children wanted to buy the other 2 out then he/she would pay the other two £50k each and would end up with sole ownership of the house. The cash would not go into the estate out of which to met the cash bequests to the grandchildren, and if the terms of the will are as you imply then those bequests would fail.

The alternative version may be that the terms of the will provide for his estate to be realised and for 1. cash bequests to be made out of the proceeds to the grandchildren and 2. for the balance of the estate to be divided equally between the three children. In that scenario the cash bequests to the grandchildren would take precedence. In that case and using the numbers above one child would notionally pay 150k for the house. let's assume there are 3 grandchildren and the cash bequest to each was 10k. They each get paid 10k leaving 120k to be divided between the three children so each child gets 40k. The child who bought the house has a net spend of 110k as opposed to 100k in the first example.

Let me add that in the 2 year period following your FIL's death the beneficiaries can vary the terms of the will by entering into a Deed of Family Variation under which the terms of the will are effectively rewritten So if the terms of the will provide for scenario 1 but the beneficiaris agree that they would prefer scenario 2 to apply they can achieve this by means of this deed.

[55palfers]

A similar thing happened to my mother when her aunt died.

The will had specified monetary amounts for other family members and the balance of the estate was to go to my mother.

By the time the bequests had been paid, funeral and other costs defrayed, my mother ended up with nothing.

[Pro Bono]

Drawweight said:

My FiL had died leaving his house to his 3 children and cash sums to his grandchildren. My wife and one brother are executors. However there is no money to pay the cash sums. The plan is to sell the house and use the funds pay the grandchildren then the remainder goes between the 3 children. This is going to be done nevertheless but if there was no cash spare to pay the grandchildren at the time he died then did that bequest really die with him?

Yes. There's a principle in dealing with someone's estate known as `abatement'. It's applied where, as in this case, the testator has left gifts to a value greater than the estate.

Abatement basically means that different classes of beneficiaries have different priority. Those with top priority are any who are left a `specific' legacy (a legacy of a specific item). Next in line are any who were left a `general' legacy (a cash sum). At the end of the queue are the `residuary beneficiaries' (the ones who get whatever's left after debts and legacies have been paid).

In this case the gift of the house is a specific legacy, so the 3 children inherit it. As there's no cash the grandchildren's legacies (which are general legacies) are abated and they get nothing.

[R0G]

Pro Bono said:

Yes. There's a principle in dealing with someone's estate known as `abatement'. It's applied where, as in this case, the testator has left gifts to a value greater than the estate.

Abatement basically means that different classes of beneficiaries have different priority. Those with top priority are any who are left a `specific' legacy (a legacy of a specific item). Next in line are any who were left a `general' legacy (a cash sum). At the end of the queue are the `residuary beneficiaries' (the ones who get whatever's left after debts and legacies have been paid).

In this case the gift of the house is a specific legacy, so the 3 children inherit it. As there's no cash the grandchildren's legacies (which are general legacies) are abated and they get nothing.

This is the correct answer

Badly written wills can cause issues which is why a good solicitor is needed in many cases

[Drawweight]

Thanks all who responded.

I haven’t actually seen a copy of the will yet but I suspect that the cash sums were to be taken out of his savings and the house split between the 3 children. Unfortunately he didn’t envision having to pay for a care home in his latter years.

The sums are only minor, being a couple of grand to each of the 3 grandchildren so they will be paid out of the sale of the house irrespective of the wording of the will. It just shows you how the wrong word or phrase can completely alter the meaning tho.

As an aside I did a round trip of 450 miles for the funeral yesterday and didn’t see a single police car.

Edited by Drawweight on Friday 29th May 10:45

[Sheepshanks]

Pro Bono said:

In this case the gift of the house is a specific legacy, so the 3 children inherit it.

That's interesting - I wasn't aware of that. It makes perfect sense for a physical article left to one person, as it prevents the item from needing to be sold, but makes less sense for something like a property which, when left to be shared between multiple benficiaries, is almost certainly going to be sold (even if it's to one of the beneficiaries).


I'm currently word for word in the same position as the OP - except that a couple of years ago FIL recognised he was running out of money so he took the grandchildren out of his Will. So his estate, including the house, is just divided between his 3 kids, with an understanding that we'd do what we felt appropriate for his grandchildren.

[AndyAudi]

Sheepshanks said:

So his estate, including the house, is just divided between his 3 kids, with an understanding that we'd do what we felt appropriate for his grandchildren.

Have a look at the deed of variation mentioned if it helps details are on gov.uk website. my family used this recently (some of the original beneficiaries were over retirement age with IHT issues of their own, so they altered things)