‘I have been left a property with a sibling. They want to keep it, I want to sell’

I have been left half a property with a sibling. I would prefer to cash in my half, but I think they would like to keep it. What is the best way to proceed, and do I need to wait for probate to act? Could I negotiate to receive the value of my half of the property from the remaining liquid assets left to us in the will?

A property left to siblings in a will is a common occurrence.

A parent can direct that it be sold on their death and the proceeds divided between their children, but should their death coincide with a property crash, this may prove a poor time to sell.

Most parents will let the children themselves figure out what they want to do with it, says solicitor Elaine Byrne from Athboy, Co Meath.

Can a will made overseas delay probate of an Irish estate indefinitely?

‘My husband has died and our home is in both our names. Do I have to notify the Land Registry?’

‘I’m an American, can I live in Ireland for six months of the year?’

“You are relying on them being able to work it out together,” says Byrne. “But if you feel the family probably isn’t going to get on, it’s better to direct it to be sold.”

Where siblings can’t agree, the executor of the will can pull rank and sell it with the agreement of the majority. This can be trickier when there are just two beneficiaries.

Siblings will save themselves stress and expense by doing their best to agree a course, says Byrne.

“If you can’t figure it out yourselves, a judge will just tell you what to do, but it will be €100,000 gone out of the pot, so just have a bit of sense.”

Whether you decide to sell the home on the open market and split the proceeds, or one sibling buys the other out – try not to bring solicitors into it until you’ve agreed what to do, says Byrne.

[ Will my friend’s homemade will stand up to any legal challenge from family?Opens in new window ]

“Once you have agreement, then a good solicitor and a good tax adviser will be able to effect your plan but try to get your sibling on board first.”

Selling the house and splitting the money is the simplest course. Speak to the executor first, says Byrne.

It’s their job to submit the necessary forms to the Probate Office – probate is the process of sorting out who gets what after a death. Their role includes submitting to Revenue a registered valuer’s assessment of the market value of the property on the date of death.

Children can inherit €400,000 tax-free from parents – so the probate valuation is important because it will be the basis for calculating if the siblings exceed this threshold, making them liable for capital acquisitions tax of 33 per cent on anything above that.

A big difference between the valuation of the property at the time of death and how much it ultimately changes hands for can generate a capital gains tax (CGT) headache for beneficiaries, too.

Beneficiaries can be liable for CGT of 33 per cent on the difference.

“If the house is valued at €500,000 at the date of death, for example, but you later sell it for €700,000, you’ve walked yourself into a big fat capital gains tax bill,” Byrne says.

“Ask the executor to hold off on sending anything to Revenue until you are 100 per cent happy with your plan and with the valuation.

“Because once you submit the valuation, you are stuck with it.”

If instead of selling up your sibling wants to keep the property, one route is to agree that you get the equivalent value of the house from the estate while your sibling gets the house.

“This is predicated on what’s in the estate and whether there is sufficient monies to allow this to happen,” Byrne says.

“If the house is valued at €500,000, for example, and there are liquid funds in the estate to the same value, one solution might be a deed of disclaimer.”

[ Succession in the sun: Inheritance tips for people who own property overseasOpens in new window ]

This means you refuse an inheritance or gift, causing it to fall back into the estate and pass to the next entitled person.

“You could ‘disclaim’ your interest in the house and the residue in the estate in consideration of €500,000,” she says.

“The house would fall into the residue, and you would be deemed to inherit €500,000 from your parent, [so inheritance tax may apply] and the other child is deemed to be getting the house from the parent – so it’s really tax efficient.”

Individuals, however, should seek tax and legal advice tailored to them, she says.

If you are going the deed of disclaimer route, or the similar deed of family arrangement route, it’s important to complete the process within two years of the death to avoid constituting a disposal of the property, which could trigger CGT, she says.

[ Q&A: Must I go to probate over dead relative’s small holding of shares?Opens in new window ]

“All of these things can be worked out,” says Byrne.

“Start early, speak to your sibling, agree everything together first. Anything is possible with sensible beneficiaries and an executor.”

Please send your queries to Joanne Hunt, Ask the Lawyer, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to joanne.hunt@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice