Estates and wills are typically handled by solicitors so it can feel like you’re facing a minefield if you’re left with a loved one’s legal affairs to deal with. This guide covers some of the most common areas you will need to consider if you have inherited property. You should always seek professional advice to ensure you fully understand the options for your personal circumstances.
The executor of the will – usually a solicitor, child, sibling or family friend of the deceased – will oversee the distribution of the estate to the beneficiaries and ensure any taxes or monies owing are paid.
If there is no will, and no living spouse or civil partner, entitlement falls to any children of the deceased.
If there is no spouse and no will you will need to apply for a ‘grant of representation’ to enable you to access the deceased’s bank account. This is also known as a probate. Once probate is granted you will have access to their funds and can take control of their assets to divide amongst beneficiaries and pay any related outgoings.
Having to think about complex financial, insurance and legal matters after the death of a loved one can feel overwhelming but the reality is property affairs don’t have to be dealt with immediately and most lenders will be sympathetic to your circumstances.
Some taxes won’t be due instantly and most mortgage companies will allow a grace period while you put arrangements in place. Until a will is executed and you officially take on ownership of a property there is no one for them to collect payments from so it is in their interests to work with you, not against you.
Broadly speaking, if you inherit a property you have three options – to either, sell it, rent it out or move in. If there is still a mortgage on the property renting it out will create an income to meet these monthly payments. Selling the property will generate a lump sum, which is a common choice if the proceeds of a loved one’s estate are being shared between a number of people.
Tax Explained Simply
Inheritance tax is currently set at 40% of any property and assets worth more than £325,000 and you are required to pay this within 12 months.
If you rent out the property you might be obliged to pay tax on the rental income. Profit from the rent is added to your salary and can increase your tax liability. However, you will only be taxed on the profit, which is the amount left after any mortgage payments and expenses have been deducted.
Capital gains tax may be due if you sell the property for more than the value it was worth when you acquired it. The tax will be due on the difference between the two amounts. This only applies to properties that aren’t your main residence so it may make sense to move into the inherited home so it qualifies for the lower tax rate. There are also other ways of paying less tax such as donating inheritance tax to charity.
There are various insurance policies that may be suitable depending on your circumstances. If the inherited property is going to stand empty for more than 30 days you will need to take out unoccupied home insurance. Your obligations, in the event of a claim, will include regularly checking on the property and keeping it well maintained.
Landlord insurance is a specialist policy offering specific cover if you rent out the property. You should be mindful that standard home insurance policies may not provide the same level of protection. If you decide to keep the inherited property and stay in your current home you may need a second home insurance policy.
If the inherited property is mortgage-free and standing empty – and you have no immediate plans to rent or sell it – you should consider investing in a home security system. A burglar alarm acts as a visible deterrent as well as alerting neighbours that there has been a potential break-in.
If you live a long way from the property and are not able to visit it regularly a monitored alarm will give you the peace of mind that someone is watching over it, even when you’re not there. Any footage can also be used as evidence, in the event that there is a security breach.
Timber and steel hoardings can be used to secure access points to the property and help keep unwanted visitors out. Take the time to maintain the property and its grounds and put interior lights on timers. This gives the appearance that it is well looked after and in use, helping to ward off intruders. It also means that if you decide to put the property on the market sometime in the future, it will be in a good order to attract the maximum selling price.
This blog post has been prepared in collaboration with SafeSite Security Solutions, who provide security options for vacant properties.
Like what you see? Then give us a share:
Any accusations of sexual assault can turn your world upside down and being accused can be a difficult and distressing situation to cope with, especially if those accusations are false. Because of the highly sensitive and personal nature of any allegations, they can have life-changing consequences for you and your family. So if you’ve been…
Being the Executor of a will is an important legal role that many have heard of, yet few fully understand the responsibilities that go with it. Beyond what an Executor actually does, we find there are lots of questions surrounding this significant role, including, how many Executors are needed for a will. So whether you’re…
Estates and wills are typically handled by solicitors so it can feel like you’re facing a minefield if you’re left with a loved one’s legal affairs to deal with. This guide covers some of the most common areas you will need to consider if you have inherited property. You should always seek professional advice to…