Hi . I really need some advice. In my fathers will - too be equally divided 3 ways. Im a beneficiary and the executor has said the factory in VIC is to be auctioned because exec wants it for himself. Breakdown in relationships. The other beneficiary and myself would like to buy it at auction and use are 2/3 share and pay the balance. The referral for legal advice said it is complicated and there is a conflict of interest as the executor will be bidding to. I would really like for us to not have to go to auction and go 1/3rds but the executor believes he is entitled to everything and wont negotiate. Not sure if it is worth paying money & going legal avenue. Any advice would be really helpful.
Deceased Estate - Property Auction
LShells123 on 20/11/2020 - 14:08
Comments
Errr, can you get everything valued in the factory as well because that seems to be a point of contention, they could be worse off
First things first ask on OzB….
Then and only then you should seek legal advice.
I'd get a mediator and try to stay away from all Legal Venues.
All that will do is eat up most of the estate if they have their way .
Ozbargain is full of mediators:)
You seem to think mediation is cheap. It is not.
Is the factory the only asset?
Or are there a number of assets, so that mediation might be able to share things out to equal fair value?Also, I'm guessing the executor is also a 1/3 beneficiary?!?
Go to auction. Then the bidding I assume will between you and them. One of three scenarios happen.
You bid highest in which case you and one other beneficiary pay one third of that price to the other beneficiary.
Other beneficiary bids highest, in which case they pay you and other beneficiary out each one third of the price.
Someone else bids highest and you each get one third of that price.Legal action is messy and costly.
It would be in the OPs interest to bid it up high as the most they are going to pay is 1/3. The other person won't bid too high as they will be on the hook for 2/3. This of course assumes the other assets of the estate are minimal in comparison.
You really need to pay for proper legal advice for this one.
I reckon Ive seen enough of Lionel Hutz in action to advise you.
Presumably the executor is the third beneficiary.
The executors ability to sell the asset will probably depend on whether the will states the 3 beneficiaries equally share the whole estate or equal shares in the specific asset.
The executor has a fiduciary duty to act in the best interests of the beneficiaries. If they are administrating the entire estate among the 3 beneficiaries, selling the asset at auction could be enough to demonstrate this.
Its likely the executor has obtained legal advice and is acting within the law.
You can go extreme and make application to the court for the removal of executor and the administration of the estate by an independent person. I think this is a costly exercise and would only succeed if you can evidence a failure to act in your best interests.
If the executor refuses to negotiate and the asset is auctioned, it might be wise not to reveal what your intention is.
Give the executor the impression you concede, then bid at auction using a buyers agent. That way you can remove some of the emotion from the process.Thanks everyone for your comments. The executor is equal 1/3 share of the estate. Someone has tried to mediate and it was unsuccessful. Unfortunately executor is not willing to negotiate on anything . Ive had initial legal advice now & it would involve going down the legal way to be able to go to auction & use our 2/3 share and we might not even get the property because money is not an issue for the executor etc. There is other assests but this is the only one worth keeping. It would be good to keep in family but that doesnt look like it will happen.
we might not even get the property because money is not an issue for the executor etc
So you want the factory, irrespective of its value? E.g. it's valued at 100 (based on cash flow, etc.) and you're prepared to pay 200?
If that's the case then that's just stupid. Why?
If it's not, then let the guy with the money pay over market value and use the money and buy yourself a similar factory at market value if you want a factory so much and spend the balance on a holiday, whatever.
Does the executor understand that if he buys it you get 2/3 ??
Bid. Worse thing that can happen is you end up with an overpriced factory. Best thing that can happen is executor will pay you 2/3 of an over priced factory.
I don't know legally why it would be a problem as it is an open public auction and third parties can also bid. Would be a problem if it was sealed bids and so happens one of the related parties win and it is revealed there was a higher bid.
Now that's a interesting POV… unless the executor knows your gonna go stupid high and plans to leave OP holding the bag, lol.
I would think whoever has too much pride would end up holding the bag. Auction situations are always more about emotion than about fundamental value.
If you think about it the stock exchange is a constant auction where as if you have to negotiate a sale and have to think about fundamentals then prices would be more reflective of reality.
I don't think this is a great idea at all.
1) Its high risk and low gain.
2) You have to pay the Auctioneer now.
3) What if someone outside really buys it?
4) If you acquire the property via a sale, would you be up for Stamp Duty and other costs which may not apply via deceased estates?
Yes, option 3 is a real possibility..
Bid hard and high if you really want it. If you win, you have the factory, if you don't you will have enough to set up your own factory. If generous asset write off rules you will have advantage on the new factory equipment too. Buyer's agent is a good suggestion.
If you buy at an auction, if there is any attached land and building, you will have stamp duty liability too. So, keep some funds aside for that. Setting up brand new business may get you additional incentives from multiple levels of government. You have already received some great suggested FOC. If you make it big, just don't forget the professional bargainers hehe.
1) Its high risk and low gain.
OP actually wants the property. The only risk is you pay too much in a bidding war.
2) You have to pay the Auctioneer now.
OP said mediation / negotiation failed. Will be auctioned or private sale regardless.
3) What if someone outside really buys it?
If someone comes and offers you 20% more than you are willing to pay your property then you going to refuse?
4) If you acquire the property via a sale, would you be up for Stamp Duty and other costs which may not apply via deceased estates?
Not sure of the rules but unless you are sole heir and it is a straight transfer buying other people's share you'll be paying stamp duty when property changes hands. I doubt the government would be that generous unless the other two co owners die and so happens to leave it to you in their will too.
Does the will say "sold and equally divided" or just "divided".
If the former then it has to be sold. If the latter, then 2 votes of 3 can play the waiting game.
Also, your executor (hopefully there is more than one) is supposed to act in the best interest of the estate, not themselves.
your executor (hopefully there is more than one) is supposed to act in the best interest of the estate, not themselves.
The mistake was appointing an executor with a financial stake in the outcome.
Yep
My sister and I were both executors of Dad's will but we were both on the same page and most of the property had been liquidated by the time he died.
I've appointed a couple of mates, neither are beneficiaries.
Thanks again everyone. Its equally divided. Unless all three agree on the asset then apparently it just gets sold. Myself & 1 also beneficiary dont have the funds to buy the property at auction unless we can utillise our 2/3 share. We would have to decide to engage a lawyer to see if we could do this. I dont believe it will be worth the expense. The only good thing is the market is verg good. So i would hope it gets a good price & maybe I could buy a property with the other beneficiary as it would be our retirement. The executor has ooodles of money so could just buy it. Who ever buys at auction has to pay stamp duty. And all 3 would pay agent & auction fees.
Don't you just need 1/3 of the funds?
Can you get a loan - 33% LVR is pretty safe for a lender.
If not, what about a bridging loan?
If it's too risky for a lender to lend you the money, then it might be for your protection and in your best interest.
Agree the executor is not rational- Im reluctant to take legal action as it swallow up the inherintance. Just wanted a chance to bid at auction if it went for a reasonable/market price.
check the reserve and get a proper valuation
Yes we can get 1/3 funds to buy at auction. Unfortunately Its not simple as going to auction & buying. We would need to engage a lawyer to do legals to enable to do this . Prob speak to lawyer on monday and find out Thanks for trying to help everyone
Yes. Great idea. Check reserve and get valuation. Thanks
The valuation should be coming out of the estate funds, can you find it out?
Yes valuation would come out of the estate.
I meant do you know what the valuation is?
Just market valuation. There hasnt been a sworn valuation done.
Just make sure he doesnt get it too cheap at the auction
Thanks. Totally agree. Thats why we would like to be able to bid. For that reason & its always good to keep something in the family that has been passed down.
My landlord, probably as an investor, gets a written valuation sent to him every year probably for land tax and rates purposes. Ir comes here, to the house. I think it comes from the Valuer General, dont have the letter to check
Thanks for the info.
That would be on land only. The value of the land is the basis of council rates calculations (and land tax if applicable)
The land value is very important as well for the factory. And whether it is a going concern affects whether GST is payable. When I looked at commercial property I did some research on things like GST. You can search under your State for information
You just said that you spoke with a solicitor.
I would have a solicitor plead with the courts to halt any proceedings of sale until you all can work things out.
Welcome to greed and the true side of people.
Hi, can you pls give us an update on what's happened since?
First of all I think go get some initial legal advice would be the safest bet.
I would sit down with all parties and try to work it out.
You all seem to want to keep the Factory and since the will does not stipulate the Factory will go to John, the House go to Jane and my shares portfolio goes to Jack, the default would be all has a 1/3 share acfross all assets.
One person can claim ownership of the Factory if the other 2 beneficiaries agree and get 1/3 of the estates value in other ways.
Don't let the executor push you around, you have rights and a family law expert will be able to help you (of course at a cost).