One question that we frequently get asked is “What happens to a property when someone dies?” and it’s important that you understand the answer if you are administering a deceased person’s estate. This informative blog post takes a look at who is responsible for the property when an owner dies, what happens to the property and what could be involved in dealing with a property after death.
Who is responsible?
The responsibility falls to the executor (when there’s a Will) or the administrator (when there’s no Will). They are accountable for not only the property but the entire estate administration after their loved one has died. This involves following the wishes in the Will or distributing the estate as per the rules of intestacy when there is not a Will.
The role of an executor or an administrator is one that shouldn’t be taken lightly as they are financially and legally responsible for the correct distribution of the estate. Executors and administrators are not obliged to take on the responsibility and they can choose not to accept the role if they wish. It’s also perfectly reasonable for executors or administrators to seek professional advice or to appoint a professional to handle the estate on their behalf.
What happens to the property?
The property automatically becomes the responsibility of the executor or administrator. Therefore, if anything was to happen to the property after the owner had died, they would be responsible for dealing with any issues. Most household insurance policies do not cover unoccupied properties upon death or they have very strict conditions where you will not be covered if you breach any of the terms. At Kings Court Trust, we offer insurance that covers the deceased’s property to all of the families who entrust us to take care of their estate administration.
We recently were appointed to take care of an estate where shortly after we started administering the estate, the house owned by the deceased flooded. As we were appointed to administer the estate, we were responsible for dealing with the aftermath of the flooding and our property insurance covered the costs, leaving more money in the estate for the beneficiaries.
What could be involved in dealing with the property?
When it comes to dealing with the property, the executor or administrator may need to take care of the contents and belongings in the property and deal with any utilities such as water, electric and gas. They must also seek a valuation and arrange to transfer the property to the beneficiary(s) or sell it.
Before this can be done, it’s firstly important to work out how the property was owned. It could be that the property was owned solely by the deceased or they co-owned it with someone else, so the deceased only had a share in the property.
The requirements are different, depending on the ownership of the property, if the intention is to transfer the property into the name of the beneficiary(s). If the deceased was the sole owner, the executor or administrator can transfer (assent) the property to the beneficiary(s) using a Land Registry form known as an AS1.
It would be necessary to obtain a Grant of Probate if the property was owned in the sole name of the deceased, allowing the executor or administrator to either transfer it to the beneficiary(s) or to sell it.
If the property was co-owned, it would be necessary to identify if the property was held as beneficial joint tenants or tenants in common. Irrespective of the wishes in the Will or the rules of intestacy, if the property is owned as joint tenants, the property will pass directly to the co-owner and you would typically use a DJP (death of a joint proprietor) form to register the death with HM Land Registry and update the title deeds (Land Registry entries) to remove the name of the deceased.
If the property was owned as tenants in common, the share of the deceased will form part of their estate and will need to be dealt with in line with their Will or rules of intestacy. If the estate is being left to the co-owner then it will be necessary to use a DJP form (as above) and ideally remove the restriction which identifies that the property is held as tenants in common on the title deeds.
If the share in the property is left to a beneficiary(s) other than the co-owner, it will be necessary for the co-owner to transfer the property to effect the name of the new beneficiary(s) on the title deeds. This can be done using a Land Registry form known as a TR1.
Strictly, if the property was co-owned (either as joint tenants or as tenants in common), there is no requirement to obtain a Grant of Probate to deal with the share of the deceased. We would always advise obtaining a Grant of Probate though so that there is documentation as to what happened upon death, especially if there is a need to utilise either the transferable nil-rate band or residential nil-rate band on the second of a couple to die.
There is a lot to consider when it comes to dealing with the property when someone dies. That's why we'll be creating part two of this blog series to cover what to do if the property is leasehold or what happens when the property is rented. We'll also take a look at the charges associated with transferring the property.
Dealing with the property is just one part of the estate administration process and as you can see there is quite a lot to take into account. Estate administration is the process of dealing with a person’s legal and tax affairs after they’ve died. This can involve dealing with all their assets (property, personal possessions, shares, bank accounts), paying Inheritance Tax and Income Tax, paying any debts and transferring inheritance to the beneficiaries of the estate. To find out more about estate administration, call our Client Services Team on 0300 303 9000 or email ClientServicesTeam@kctrust.co.uk.