Dispute with an executor over the value of an estate asset
When a valuable asset is being sold by an executor, beneficiaries can benefit from a second valuation.
Jon Faine: Good morning to you Sue.
Sue: Good morning.
Sue: Just enquiring, I am actually a beneficiary, it is held in a trust account and we are just currently waiting for a death certificate to come through ... The person has passed on. There is a property with a lease in place and we feel it is grossly undervalued because the tenants actually want to buy it. Are we entitled to two valuations? Because we have been told we are only entitled to one.
David Whiting: Sue, what are you, are you a beneficiary?
Sue: Yes, I am the beneficiary.
Jon Faine: Are you the sole beneficiary?
Sue: No, there is four of us. Three natural children and one not. And I am one of the natural children.
David Whiting: Sue, and is this a dispute between you and the executor?
David Whiting: And the executor has obtained the valuation?
Sue: Well, the trustee.
David Whiting: Alright, there is a trustee who has the job of selling the property?
Sue: Yes I believe so.
David Whiting: Does the will provide for the property to be sold?
Sue: Yes, if we would like to, so basically they will ask us that question: do we want to continue leasing it or do we want to sell it? If we all decided “yes, we want to sell it”, so be it. But we would like a property valuation, because we feel that they keep telling us what it is worth, and I think it is worth a lot more.
David Whiting: Is it the kind of property that might go to auction?
David Whiting: Because lots of industrial properties do not go to auction because the sale seems to require negotiation rather than the fall of a hammer.
Jon Faine: Sorry, is it commercial or residential?
Sue: It is both, commercial and residential.
Jon Faine: At the moment there is a residence and a factory?
Sue: Correct, it is a huge property.
Jon Faine: Okay.
David Whiting: Sue, you could get your own valuation.
Sue: Good. Would it cost me personally or would it come out of the estate?
David Whiting: No, you could go to the trustee and say, “the four of us are not happy with the process”, because if it is the four of you, and together you have a particular view, you are in a position where you are able to force the trustee’s hand.
Sue: So they are saying we can have one valuation and we want two independent ones.
David Whiting: Then you could get the second one and if you all contribute to the valuation Sue.
Sue: So it would be a cost?
David Whiting: Yes I know but isn’t it the same net position as if it was paid from the estate?
David Whiting: So if the four of you agree then why not contribute to the cost of the valuation?
Sue: And if the four do not agree?
Jon Faine: What is it worth Sue, how much is this property worth?
Sue: About $4 million, I would say.
Jon Faine: Okay, are you really going to argue about a few hundred dollars for a valuation?
Sue: No, not at all.
David Whiting: No, it is a couple of thousand dollars for a valuation.
Jon Faine: Well, some hundreds of dollars each.
David Whiting: Yes.
Jon Faine: Between four people, that is what I was thinking. It is just not worth even hesitating over is it?
Sue: No, that is true.
David Whiting: But you might be able to find someone who has done a valuation on it before.
Jon Faine: You would want one for current market conditions, if it is a $4 million property.
David Whiting: But what the trustee is saying, Jon, is “I have a valuation, I am now going to sell the property based on the valuation”.
Jon Faine: So you do not trust the trustee so you want to get one, just fork out a couple of hundred dollars each.
Sue: The people who are actually renting it want to buy it, so that is why they are keeping the price very low.
Jon Faine: But if you don’t trust the process and you are suspicious then fork out a bit of money. Get the information that you need so that you know whether they are right or you are right ...
Jon Faine: ... about what it is worth. It is just not worth losing a night’s sleep over ...
Sue: No, that is correct.
Jon Faine: ... when there is that much money at stake.
Sue: They railroad you and say “no, this is all you can have”.
Jon Faine: No, they can’t do that.
David Whiting: I do not know what the will says, but if the will says this property passes to the four of you, if you all agree, and if you do not, it gets sold and you get four cheques.
Sue: Well, the actual tenant has the first right to purchase.
Jon Faine: Sure, but at a price that you all agree to.
Sue: But we need to get sort of someone outside.
David Whiting: You need to read what the first right of refusal says in the lease, and you need to see what that process is and I would then go and get another valuation so that you can be satisfied that it is right.
Jon Faine: Alrighty Sue, good luck with that, I hope that helps. Certainly not something with that money involved ... David where you would ...
David Whiting: For $4 million I would be spending a few hundred to make myself feel comfortable with the outcome.
Jon Faine: Yes, it does not make sense not to at all.