PLEASE READ BEFORE POSTING
Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.Confusion about status of a property partially left in trust to me
Options
Comments
-
getmore4less wrote: »You don't have any say on the sale the trustees are responsible for that.
There is no extra SDLT on another purchase as you don't have a beneficial interest in the property while it is in the trust. The beneficial interest lies with the life tenant.
DOV need to be done in 2 years of death.
Thanks for this, it's very useful - but I'm a bit confused about why stamp duty as second home will be charged on 'my' half if my mum buys a new home with the sale proceeds (according to a solicitor) - why is it not considered 'first home' when I buy my own property, but then counted as my second home for tax purposes when my mum buys a new house?
Or has she just been advised wrongly?
-Also your first point - both me and mum are named as trustees in the will, if that means anything. My mum's solicitor says any sale has to be 'cleared' by me because of maintaining my interest in the property or something. That part doesn't really matter though as I am perfectly happy for her to do whatever she wants with the house, it's just the unfair tax bill when she buys a new one that bothers me.0 -
Who told you this?
Stamp duty is not payable on a sale, only on a purchase. So you and mum can sell without any stamp duty liability.
Now, if you and mum jointly buy another property, then yes, the additional stamp duty will be payable - is that the plan?
How long ago did your dad die? I believe a Deed of Variation to a will can be executed up to 3 years from the date of death. If so, you could explore the possibility of varying dad's will so that the trust need not inherit on your behalf.
For example, you (as Beneficiary of the will) could vary the will such that your inheritance goes to mum. She then owns the house 100% ad can sell, and buy or whatever.
Are there Inheritance implications on dad's will or was his Estate below the IHT limit?
You should also consider whether giving it to mum would increase her estate to above the IHT limit, which would obviously not be desirable.
Are there any siblings or are you sole Beneficiary of dad's will, and likely to be sole Beneficiary of mum's will? (ie the property will come to you in full eventually one way or another)?
Sorry, I was referring to the new house purchase for stamp duty, not the house sale.
My dad died just over two years ago. I have read the bits of the will that relate to this and it's pretty confusing because all it seems to do is name me and mum as trustees, and bequeath his half of the property (I think they had already split their assets down the middle prior to his death) to both of us with a caveat that mum can stay in the house until she dies. (I don't think there is enough money overall to make inheritance tax an issue)
I think this half in trust to me thing must have been something my mum arranged separately. I really hope we can undo this and put it all back in mum's name as it is so unfair for her to have to pay second home stamp duty on half of it!0 -
Sorry to jump on to this post, but this has been something I've been wondering for a while now.
Re the extra stamp duty - if someone is left part of a property in trust, and they later then go on to purchase their own home (which what would otherwise be their first home), are they legally considered to 'own' the property in trust, such that they would encounter a higher stamp duty upon purchasing their own home, which would inadvertently become their 'second' home?
From what has been explained to me - the trustees of the property in trust don't technically 'own' the capital unless they want to sell the house. So it would not be considered as already owning a property? Would someone be able to clarify?
I'm hoping from the post above that this is the case as I also bought my own flat without even thinking of it... although it obviously stinks if the resident of the entrusted house wants to sell it. I really can't see any justification for counting that share as my 'second home' when it's sold if my poor mum is the guaranteed lifetime resident, not me!0 -
From what you say, it seems likely to me that the half share in the property has been left in a formal trust, with your mother having a life interest and you having a remainder. It seems that you and your mother are now the registered proprietors, holding on trust as to one half for your mother absolutely and as to other half under the trusts set up under your father's will.
Assuming that to be right, then the SDLT problems you identify disappear. The provisions for the 3% surcharge are set out in Finance Act 2003 Schedule 4ZA. This has special provisions for trusts. Where an interest in property is held on trust with someone having the right to occupy the property for life, for SDLT surcharge purposes the property is treated as held not by the trustees, nor by the remainderman, but by the person with the life interest.
So when the trustees bought a replacement house for your mother to live in, the SDLT surcharge would not have been due because one would look only at your mother's circumstances. So even if she had owned another property at the time she would have benefitted from the exception from the surcharge for the replacement of an only or main residence.
For your purchase, your mother's property would not "count against you" for 3% surcharge purposes as it is treated as belonging to your mother, not to you.0 -
Thank you SDLT Geek, I do think it must be a formal trust so your comments are extremely helpful. We have an appointment to see the solicitor about this next week so I will reference the Finance Act 2003 Schedule 4ZA and keep fingers crossed....!0
-
Do you also happen to know if this provision would also apply to capital gains, since the house being sold has gone up in value? I.e. that it won't be treated as sale of a second home on my half?0
-
Thank you SDLT Geek, I do think it must be a formal trust
But have the formalities been properly observed?
https://www.swwtrust.co.uk/life-interest-trusts-in-wills/
You sayFor some reason he apparently put me on the land registry as co-owner as well,
What exactly does the Land Registry entry show?
https://www.gov.uk/government/publications/private-trusts-of-land/practice-guide-24-private-trusts-of-land
https://www.gov.uk/government/publications/trusts-and-capital-gains-tax-hs294-self-assessment-helpsheet/hs294-trusts-and-capital-gains-tax-20150 -
Tante, when you see the solicitors next week you can refer them to:
- FA03/Sch4ZA para 10 for the SDLT position on the replacement of the house your mother lives in
- FA03/Sch4ZA para 11 for the SDLT position on the flat that you bought for yourself.
0 -
What exactly does the Land Registry entry show?
I've just seen the scan and all is says is Title Absolute, PROPRIETORS - Mrs Mum of Address 1 and Ms Me of address 2.
Then a "RESTRICTION: No disposition of a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court."
My mum now tells me that the will is the only paperwork and she thinks that it is called a 'Will Trust', but she doesn't trust her solicitor to have done it right. I am slightly concerned that this doesn't seem to fit the criteria laid out in the Life Interest Trust document you linked.0 -
I've just seen the scan and all is says is Title Absolute, PROPRIETORS - Mrs Mum of Address 1 and Ms Me of address 2.
Then a "RESTRICTION: No disposition of a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court."
My mum now tells me that the will is the only paperwork and she thinks that it is called a 'Will Trust', but she doesn't trust her solicitor to have done it right. I am slightly concerned that this doesn't seem to fit the criteria laid out in the Life Interest Trust document you linked.
Standard for a will to set up the trust.
No separate trust documents needed.
Often you also make it clear the life tenant is responsible for the upkeep but when it is family often gets overlooked.
You will be legal owner as a trustee.
There is no need for that to be documented on the land registry.0
This discussion has been closed.
Categories
- All Categories
- 343.3K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 248K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards