Three brothers...

Glinda

I know of a situation where three (now very elderly) brothers were all (literally) born in a small house (no land or anything). They lived there through childhood. One one brother got married in the sixties and moved out. Their father died young, their mother lived to a great age and died some years ago.

No will could be found after the mother's death so the eldest brother was appointed administrator of the estate (mainly just the house) which is to be equally divided between the three brothers. Nothing has been done since. The other two bachelors lived happily in the house together until about five years ago (no rent or mortgage or anything) when one had to move in to a nursing home (he has dementia). The third brother still lives in the house, sleeping in the bed he has had since he was a small boy.

There is no dispute between the brothers, they are all very gentle and caring toward each other. The eldest brother is financially self-sufficient and does not want or need his share of the estate. The brother in the nursing home is adequately provided for by a good pension (but he is on the Fair Deal, so part of the house would revert to the HSE on his death, which is fine). The third brother still lives in the house and all agree they would never ask him to leave. Only the married brother has any children and they are grown up by now.

Everyone in the family agrees that the third brother should live out his remaining days in the house.

Now for the trouble... The married brother has been advised by a solicitor that they MUST now sell the house and evict the third brother. This, apparently, is because he is somehow personally liable for allowing the third brother (and the second brother for a time) to live in the house rent-free (benefit in kind) and for not realising the income potential of the estate by either renting out the house commercially or selling it.

The whole family is very upset. They have suggested gifting their shares of the house to the third brother so he can stay there (apparently that is impossible because of tax implications for him - his income is adequate for a simple life but wouldn't support any unexpected shocks!). They have been told there is no choice but to sell the house. The eldest brother has been told he is negligent and legally liable for not looking after the asset and realising its return potential.

They want to leave the third brother alone to live out his days in peace in the house. There is no possibility of the third brother buying the others out, he doesn't have the money (and they don't want to take money from him in any case). The eldest brother is advised that he can't sell the house for any less than market rate for reasons given above.

Is there any way around this? Desired outcome is that all can live in peace, nobody has a huge bill that ruins their life and the old guy can live in the house until he dies.

Ken.

Tell the solicitor "FüCK OFF PR!CK, NO PAY DAY HERE FOR YOU"

P_1

Sounds like a solicitor angling for some easy fees if you ask me

234

Glinda wrote: »

Is there any way around this? Desired outcome is that all can live in peace, nobody has a huge bill that ruins their life and the old guy can live in the house until he dies.

The other brothers would be advised to take legal advice. The internet cannot answer your questions, especially with land queries which are particularly situation specific.

That said, the only way I can conceive of any kind of need to sell the house, or any duty being imposed would be where the estate was never fully administered. I would have thought that by now the three brothers should just be joint owners or tenants in common in equal shares in the property.

But like I said, I don't know the details. See a solicitor.

Glinda

Thanks for that - I am not looking for specific answers and as set out in my OP, the legal advice the eldest brother currently has is to sell the house and divide the proceeds equally, that there is no other way. This is devastating for him and for his brothers. I am well aware that the first piece of advice people get is not always the only advice in town. I am wondering if anyone on here with knowledge or experience has any suggestions as to avenues that could be explored, that's all. The other brothers won't realistically seek any advice. As I said they are very elderly. (In fact the most likely outcome by far is that they will do nothing and will all die before anything is resolved).

"the only way I can conceive of any kind of need to sell the house, or any duty being imposed would be where the estate was never fully administered. I would have thought that by now the three brothers should just be joint owners or tenants in common in equal shares in the property."

Out of curiosity, could you elaborate on how the need to sell the house/duty etc. arises where the estate was never fully administered? I suspect nothing at all has been done since the mother passed away (presumably this means it was never fully, or even partly administered!)

Marcusm

I cannot see, on the basis of the facts provided, that the solicitor could be correct unless they house is of such stupendous value as to have created a large capital acquisitions tax liability for any of the brothers - current threshold from a parent is about 250k so house would have to be worth 750k. Pre bust thresholds were larger. I have never seen Revenue seek to impose a tax charge on the occupation of a home owned in part by other family members. The fact that he has mentioned "benefit in kind" which is a term more appropriate to an employment situation would further worry me that either the elder brother hasn't understood the advice or that the solicitor doesn't know what he is doing but is spurting jargon.

If the estate has not been administered, I would have thought it possible to execute a deed of family arrangement whereby the elder brother foregoes his interest in the property. I would not have thought that should not be very expensive. A good decent solicitor should be able to discuss the options with him for a small fee.

?Cee?view

I would suggest that the solicitor is asked to produce his advice is writing. There are more questions raised by the matters as described than are answered.

That written advice can then be carefully considered and taken elsewhere for a further opinion if necessary. It seems to be virtually impossible to understand the advice given to date.

Please don't feel beholden to the solicitor who is currently acting. Other than fees already due to him he can have no "hold" over the administrator.

Are the three brothers definitely the only beneficiaries?

Did the deceased father own the house? On his death, did the mother legally become the owner? Was the father's estate administered?

Roughly what kind of value is the house? Is the 1/3 to which each brother may be entitled of such significance that it would lead to an inheritance tax liability?

If the financially independent brother doesn't want his share, he can easily disclaim and the others entitled would take his share (Succession Act).

Another thing - if on the Fair Deal ownership of the house has to be established. How could that brother have done this if the estate isn't administered.

In summary, please don't do anything in haste here. Get all the advice in writing and only then consider if you wish to act on that advice or get an alternative opinion.

Please specifically ask for advice on this aspect:

"This, apparently, is because he is somehow personally liable for allowing the third brother (and the second brother for a time) to live in the house rent-free (benefit in kind) and for not realising the income potential of the estate by either renting out the house commercially or selling it."

This seems illogical. If the three brothers are the only beneficiaries, then who would hold the administrator liable as described if they all agree to the current status quo?

?Cee?view

P_1 wrote: »

Sounds like a solicitor angling for some easy fees if you ask me

Very rarely do I agree to a statement such as this, but in this case, on the facts presented, I have to agree.

Glinda

Marcusm wrote: »

I cannot see, on the basis of the facts provided, that the solicitor could be correct unless they house is of such stupendous value as to have created a large capital acquisitions tax liability for any of the brothers - current threshold from a parent is about 250k so house would have to be worth 750k.

House is a small, ex council house in North County Dublin - I would be amazed if it's worth 300k, especially since it's in bits (from having two confirmed bachelors in charge of it for years).

Think the tax was supposedly because of the middle brother being allowed to live rent free, and the other suggestion was that the elder brother in any way gifting his share of the house to the middle brother would bring a hefty tax bill (transfers between brothers being the case here).

I will try to get sight of the solicitor's written advice, there's plenty of room for misunderstandings here on all sides, the eldest brother is so upset.

Glinda

"I would suggest that the solicitor is asked to produce his advice is writing. There are more questions raised by the matters as described than are answered.

That written advice can then be carefully considered and taken elsewhere for a further opinion if necessary. It seems to be virtually impossible to understand the advice given to date."

Yes, I will definitely do this.


"Are the three brothers definitely the only beneficiaries?"

Yes, no doubt about that.

"Did the deceased father own the house? On his death, did the mother legally become the owner? Was the father's estate administered?"

The mother was the owner of the house when she died (she bought it herself)

Roughly what kind of value is the house? Is the 1/3 to which each brother may be entitled of such significance that it would lead to an inheritance tax liability?

I would guess 300k absolute max, probably quite a bit less.

If the financially independent brother doesn't want his share, he can easily disclaim and the others entitled would take his share (Succession Act).

Yes, but is that a gift (attracting tax)? This is what the solicitor is saying makes this course impossible if the other brothers don't have the funds to pay a huge tax bill.

Another thing - if on the Fair Deal ownership of the house has to be established. How could that brother have done this if the estate isn't administered.

Hmmm... good question. I think the agreement is 15% of any property he owns, but I take your point that he doesn't actually own this yet.

In summary, please don't do anything in haste here. Get all the advice in writing and only then consider if you wish to act on that advice or get an alternative opinion.

Please specifically ask for advice on this aspect:

"This, apparently, is because he is somehow personally liable for allowing the third brother (and the second brother for a time) to live in the house rent-free (benefit in kind) and for not realising the income potential of the estate by either renting out the house commercially or selling it."

This seems illogical. If the three brothers are the only beneficiaries, then who would hold the administrator liable as described if they all agree to the current status quo?

I asked this and the brother said that (according to the solicitor) seemingly the Revenue would somehow come after him as administrator for lost taxes on the imaginary rent not collected, depreciation in house value at date of sale due to non maintenance in good condition and other such.

Munstermissy

Get a second opinion Glinda would be the first thing to do. Why would the brothers pay rent when it is the family home? I have seen somewhere that the beneficiaries would not be liable for CAT if they have lived the previous 3 years to their mother passing away, google this as it was something i saw in passing on another site.

I have an uncle on the Fair Deal Scheme and he is paying a % of his pension. The farm is still in my grandparents name as my uncles did not transfer ownership after they passed away so technically the HSE cannot go after that. It will probably be a mess when he passes but I am not going to worry him with that now and will deal with it when it arises.

Solicitors take a % of the value of the estate, so it appears yours are looking for top value to sell and get their cut. Again please go elsewhere as it seems you have been given dud advice.

Glinda

Thanks everyone so much - Munstermissy he has never lived anywhere else, so I will google that scenario you mention.

I think he/they will have to get fresh advice but it is really helpful to have at least some kind of basis for the questions he might ask, rather than just being completely clueless!

Regarding your own family situation, it is good to know that other people leave things to get into a mess too and it's not peculiar to my friends and relatives!

Munstermissy

Have a look on askaboutmoney.com as there is good information on there and a couple of solicitors reply to questions about this type of thing.

Best if luck and hope everything works out in the end.

?Cee?view

Glinda wrote: »

"

I asked this and the brother said that (according to the solicitor) seemingly the Revenue would somehow come after him as administrator for lost taxes on the imaginary rent not collected, depreciation in house value at date of sale due to non maintenance in good condition and other such.

Sorry, but that's off the wall crazy stuff. Surely it has to be a misunderstanding of the advice given. If not, and if the Solr confirms this view in writing ... run!!!

As to the gift from the brother. If the estate hasn't been administered and if he disclaims his inheritance, then the remaining two brothers are treated as getting it directly from the mother and the higher parent to child thresholds apply which makes it less likely that tax would apply.

If the Uncle wants to meet this solicitor again could a trusted relative or friend accompany him?

P_1

Just another thought and I caution that it may seem a bit tin foil hat.

Is the house in question in an area that could be considered as a 'prime spot for redevelopment'? I'm wondering that there might be somebody who has a particular interest in purchasing the house and has engaged the solicitor to help secure the purchase through fair means or foul.

Peregrinus

Is the issue here in any way connected with the fact that one brother is in residential care and in receipt of some degree of financial support from the state? It's a wild guess on my part, but if that brother has a share in property which is being provided rent-free to someone else, his income will be artificially depressed for the purposes of any means test that may apply to him, and that may be the source of the solicitor's concern.

?Cee?view

Peregrinus wrote: »

Is the issue here in any way connected with the fact that one brother is in residential care and in receipt of some degree of financial support from the state? It's a wild guess on my part, but if that brother has a share in property which is being provided rent-free to someone else, his income will be artificially depressed for the purposes of any means test that may apply to him, and that may be the source of the solicitor's concern.

While there's a certain logic to that, it doesn't work. The "someone else" on the facts described has the same ownership interest as the brother in the house and is perfectly entitled to occupy rent free.

Peregrinus

?Cee?view wrote: »

While there's a certain logic to that, it doesn't work. The "someone else" on the facts described has the same ownership interest as the brother in the house and is perfectly entitled to occupy rent free.

Yes, I know. The point is that he's getting the entire benefit of the ownership of the house, even though he only has a one-third interest in it. You could argue that, strictly speaking, he ought to be paying a two-thirds rent to his brothers and that, to the extent that this isn't done, the brothers' incomes are artificially depressed, and in these days of straitened public finances it may cause a problem if it turns out that one of the brothers was claiming a subvention on the basis of his limited means/limited income, but his income was only limited because he was, in effect, making a gift to his brother of the rent-free use of his share in the family home.

I stress, this is all speculative. Whatever means test is applied, I'd be surprised if it required family members to be evicted before the individual could qualify for assistance. But if the three brothers all understand and consent to the arrangement over the house, the solicitor's concern must relate to someone other than the three brothers who is injured by it, and the only candidate that I see is the exchequer.

Glinda

P_1 wrote: »

Is the house in question in an area that could be considered as a 'prime spot for redevelopment'? I'm wondering that there might be somebody who has a particular interest in purchasing the house and has engaged the solicitor to help secure the purchase through fair means or foul.

No, I really don't see how this could be the case (I'm sure it may happen, but this house is in the middle of a housing estate).

Glinda

Peregrinus wrote: »

Yes, I know. The point is that he's getting the entire benefit of the ownership of the house, even though he only has a one-third interest in it. You could argue that, strictly speaking, he ought to be paying a two-thirds rent to his brothers and that, to the extent that this isn't done, the brothers' incomes are artificially depressed, and in these days of straitened public finances it may cause a problem if it turns out that one of the brothers was claiming a subvention on the basis of his limited means/limited income, but his income was only limited because he was, in effect, making a gift to his brother of the rent-free use of his share in the family home.

I stress, this is all speculative. Whatever means test is applied, I'd be surprised if it required family members to be evicted before the individual could qualify for assistance. But if the three brothers all understand and consent to the arrangement over the house, the solicitor's concern must relate to someone other than the three brothers who is injured by it, and the only candidate that I see is the exchequer.

This could be it. Is it really the case that potential means or means foregone in some way can be taken into account for means tests? (i.e. the rent that he could possibly be charging his brother for his share in the property?). As I said before the HSE will get part of the house when he passes away. Does that mean anyone is obliged to maximise their income before passing a means test?

(Not arguing, just genuinely wondering).

There is no point in them all being terrified to death over some notional principle that is unenforceable in reality.

I have a couple of other questions:-

Is the eldest brother obliged to administer the estate in such a way as to maximise the benefit to those inheriting? - this is where the solicitor says he is negligent and potentially liable.

Can he ask to be removed as administrator if he feels he can't cope? Would he have to make good the losses to the estate because he didn't maximise its potential monetary return/value?

Peregrinus

His duties as executor are owed to the beneficiaries, who appear to be himself and his two brothers. If they are happy with what he is doing; if they consent to the arrangement, then I don't see that there is any danger that they might later sue him over it. If they have given their informed consent then to the arrangements he makes then, it seems to me, he is in the clear.

It might be different if there were others who had an interest in the estate, and whose interest was affected adversely by the way he deals with it. He could have a liablity to them. But from the OP it does not appear that that is the case.

magg1ec

Advise a look at Law Society of Ireland's publication: 'Wills, Probate and Estates'.

GR3YFOXXX

This concept of imaginary rent is nonsense. There is no obligation for an owner of a property to charge rent. The property is owned outright, it is the choice of the (3) owners to do with it as they may. The solicitor in this instance is talking total nonsense.

Santa Cruz

GR3YFOXXX wrote: »

This concept of imaginary rent is nonsense. There is no obligation for an owner of a property to charge rent. The property is owned outright, it is the choice of the (3) owners to do with it as they may. The solicitor in this instance is talking total nonsense.

Couldn't agree more. The only obligation to any party is the Fair Deal liability. Ownership of a one third share in the property would have been declared at the time of application for the Fair Deal scheme. On this brothers death his estate will have to clear the charge with the H.S.E.
Any talk about a liability for unpaid rent etc. is balderdash.

Glinda

Thank you to all for the replies - certainly lots of food for thought and it seems certain they need another formal opinion. I will keep reading and post any interesting developments here!

Glinda

Ok, well the advice here was followed and a new opinion sought. very different result this time round: it looks like everyone will get the outcome they wanted, house split three ways, brother continuing to live there by agreement, all should be resolved very quickly, much to the relief of all concerned.

Thanks a million to everyone here for your help!

Ken.

Glinda wrote: »

Ok, well the advice here was followed and a new opinion sought. very different result this time round: it looks like everyone will get the outcome they wanted, house split three ways, brother continuing to live there by agreement, all should be resolved very quickly, much to the relief of all concerned.

Thanks a million to everyone here for your help!

What a good outcome. Now 3 old men can enjoy their old age in peace and without hassle.