Does rent of a deceased person's property go into the estate before probate or can the beneficaries claim it
A relative's house was rented on a short term lease 1 week before her death, her solictor is her executer and says that one weeks rent will go to her estate and the rest of the rent will go to the four people who will inherit the property, is this correct?. It is presently being paid direct to him, what happens to the interest on the money? She died 03.02.07 the tenants occupied her property 29.01.07. the rent was intended to help support her in a residential home
Answers:
Yes, the solicitor is correct. The rent for that one week before her death falls into the estate and the rent collected thereafter (less tax) will ultimately be distributed as part of the inheritance of the four beneficiaries.He will be accountable to the estate for the rent money and it is his duty to place it in an interest bearing account on behalf of the estate. He is also under a duty to produce accounts, so you will no doubt be able to check up for yourselves that this is indeed the case. The property is currently held on a trust for sale, that is to say, it will in due course have to be sold so that the proceeds (less inheritance tax) can be divided among the four beneficiaries concerned. They cannot claim the rent money as of now, as the property is not technically vested in them and there are tax issues to be sorted out before it can be known just how much passes to them. The reasons behind the letting are irrelevant.
The estate
If they only inherit the property then it seems to me that that is all they inherit.
Any other income that comes in is due to the estate(excluding the property) so it should go to those beneficiaries.
Ask the solicitor for the source of their information.
All of the rent should go to the estate until the estate has passed through probate -- because until the estate has passed through probate, it is unclear (as a matter of law) who is entitled to that money.
However, if the land (rental property) transfers by some other mechanism outside of probate (joint tenancy w/ rights of survivorship, or by trust, or whatever) then rent would follow the property transfer independent of probate.
It can change depending on the will, laws in your area etc.
Normally, any income from the estate (interest on loans, royalty payments, rental income) goes into a trust account held by the executor. It stays there until the will is executed or probated. It is then disbursed according to the particulars of the will or the orders of the probate court. If the will is challenged, the trust account grows until the matter is settled. Interest on the trust account is distributed under the same conditions as the principle.
Normally, the governement will take taxes (including income tax) first, the executor's fees (if an attorney) go second, debts third. and then the rest is distributed.
It is the duty of the executors to manage to estate until it is eventually distributed all payments into that estate and out are dealt with by the executors then the balance paid to the beneficiaries after probate.If the beneficiaries got hold of anything before the estate is settled they could refuse to pay the debts of the estate and cause legal problems all round.
Yep, sounds right to me. If you have doubts about your solicitor, I would recommend contacting the Law Society who will be able to advise you accordingly.
PS Don't pay him too much to deal with the estate either! There are some real rip-off merchants out there (I am in similar circumstances at the moment). I am paying 1% of the estate value to my solicitor and this includes conveyencing the sale of the house. Drop me a line if you want to know more!
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