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    • Ali71
    • By Ali71 8th Aug 17, 6:24 PM
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    Ali71
    Transfer share of property out of Will Trust??
    • #1
    • 8th Aug 17, 6:24 PM
    Transfer share of property out of Will Trust?? 8th Aug 17 at 6:24 PM
    Hi All,


    Sorry about this but I have been looking for some info on how this works before I go to see a solicitor. I'm not even sure if it is a solicitor I need or an accountant.


    It concerns the closing of a discretionary trust as part of a will. Trust contents were to be decided by trustees, so only thing to be considered was to be half of family home held as tenants in common by parents. Any monies and remainder of estate went to surviving parent. Estate as such was very well below NRB for IHT purposes. Probate was granted very quickly. Surviving parent and I are the beneficiaries/executors and trustees. Surviving parent had thought LR automatically updated records as a result of Probate, Will etc, but when subject raised recently, (two and a half years post death), I said I thought it had to be done by execs of will. Solicitor was consulted.
    Did a Deed Of Appointment as turns out because of wording of trust, the half property share was not AUTOMATICALLY inherited by me, had to be done by agreement between trustees, and solicitor has done the forms to take deceased off register and add me.
    She said that was all we needed to close the “Trust” and mentioned “may” or may not be a small amount of liability depending on property price, reliefs, etc but a bit concerned after reading up and looking at various forums, on line advice etc, what we need to do if anything or how we go about this?
    Trust was never registered as no income (on advice of HM) parent lived/lives in house as main residence, property may have gone up a little in value in two and a half years although it will never be sold, and certainly not 50% of it anyway!! If I outlive parent, I will sell my home and move in, and if parent outlives me there will be no change. I don’t want surviving parent worried or bothered in any way. Got the impression from solicitor that it was fairly straight forward, I have tried looking at an estate form though not sure that’s the right thing, but seems more to do with interest cash and dividends etc. Nothing about simple half a house being appointed to beneficiary out of a trust. I have also read about hold over reliefs etc, which supposedly can reduce or delay payment of any liability??Sorry to be so long winded. All advice gratefully and carefully considered.


    Many thanks
Page 1
    • xylophone
    • By xylophone 8th Aug 17, 8:44 PM
    • 23,653 Posts
    • 13,782 Thanks
    xylophone
    • #2
    • 8th Aug 17, 8:44 PM
    • #2
    • 8th Aug 17, 8:44 PM
    Was this a "nil rate band discretionary trust"?

    https://www.gov.uk/government/publications/nil-rate-band-discretionary-trusts/practice-guide-70-nil-rate-band-discretionary-trusts
    • Ali71
    • By Ali71 8th Aug 17, 8:58 PM
    • 20 Posts
    • 3 Thanks
    Ali71
    • #3
    • 8th Aug 17, 8:58 PM
    • #3
    • 8th Aug 17, 8:58 PM
    Hi Xylophone,


    I believe so. Created originally as mirror wills at great expense by inheritance solution type company.
    • xylophone
    • By xylophone 8th Aug 17, 10:00 PM
    • 23,653 Posts
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    xylophone
    • #4
    • 8th Aug 17, 10:00 PM
    • #4
    • 8th Aug 17, 10:00 PM
    See this

    http://www.thisismoney.co.uk/money/news/article-1594984/Tenants-common.html

    Is the above what was originally intended?

    But the trust accepted the half interest in the property rather than a loan?


    More than two years after the death the Trustees (you and your mother)
    decided to pass the Trust's sole asset to one of the beneficiaries, (you) thus bringing the Trust to an end?

    You may need to consult a tax accountant as to whether there are any exit/other charges charges payable.
    • Ali71
    • By Ali71 9th Aug 17, 9:39 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    • #5
    • 9th Aug 17, 9:39 AM
    • #5
    • 9th Aug 17, 9:39 AM
    Hi Xylophone,


    Thanks for that.
    Yes the will was worded so that any amount UP TO the current level NRB could be put in to trust depending on what the trustees decided they wanted in it. Any monies went to surviving parent so all that was left to go in to trust would have been the half share in the house. The article was helpful, there were a couple of enlightening points although I have realised that trusts are a minefield.
    Even my parents, who obviously were there when the consultant discussed the wills with them, had no idea really of what the trust meant other than that it was, and is of course, a money saving exercise. None of the charges, possible liabilities etc was explained to them.
    And now the surviving parent decided as the solicitor said that trusts are no defence against care home fees it isn't worth keeping so decided to end it by appointing the asset to me, the other beneficiary. From what I have read up on, (quite a lot, actually) it seems that due the relatively low value of the "half house" exit fees/IHT charges would seem not to be payable. I am just a bit concerned about the possible CGT on the transfer out. I believe it would be, if at all, on the possible increase in value in the 2.5 years since the death. But I also believe that there are various reliefs, that come in to play. I will, as you suggest, try contacting a tax accountant if I can find a good one (there are accountants, and then there are accountants) and sound him or her out. Thank you for your help.
    • Keep pedalling
    • By Keep pedalling 9th Aug 17, 9:58 AM
    • 4,088 Posts
    • 4,443 Thanks
    Keep pedalling
    • #6
    • 9th Aug 17, 9:58 AM
    • #6
    • 9th Aug 17, 9:58 AM
    Hi Xylophone,

    Even my parents, who obviously were there when the consultant discussed the wills with them, had no idea really of what the trust meant other than that it was, and is of course, a money saving exercise
    Originally posted by Ali71
    Was is the operative word, these sort of trusts are no longer so, just a potentially expensive PITA for your beneficiaries. Anyone with a will still containing such clauses really should get new wills drawn up pronto.
    • Ali71
    • By Ali71 9th Aug 17, 10:37 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    • #7
    • 9th Aug 17, 10:37 AM
    • #7
    • 9th Aug 17, 10:37 AM
    Yes, surviving parent had new bog standard will made. Now, back to the search for an accountant.................
    • xylophone
    • By xylophone 9th Aug 17, 1:39 PM
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    • 13,782 Thanks
    xylophone
    • #8
    • 9th Aug 17, 1:39 PM
    • #8
    • 9th Aug 17, 1:39 PM
    Ask the accountant whether he has a qualification in the taxation of Trusts and Estates.
    • jimmo
    • By jimmo 12th Aug 17, 12:01 AM
    • 1,889 Posts
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    jimmo
    • #9
    • 12th Aug 17, 12:01 AM
    • #9
    • 12th Aug 17, 12:01 AM
    Are you jumping out of the frying pan into the fire? I don't know a lot about trusts but I like to think I know a bit about Capital Gains Tax.
    Having said that the fact that "your share of" the house has been taken out of your deceased parent's will trust is a chargeable occasion for Capital Gains Tax. Strictly speaking that requires valuations of what the will trust acquired when your parent died and what it disposed of when the will trust disposed of when it was terminated.
    However it is almost certain (but you need to check) that the surviving parent was a beneficiary of the will trust who occupied the family home as their main residence throughout the period that the will trust existed.
    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65400

    If that is the case the Capital Gain realised by the will trust will be fully covered by Private Residence Relief and no tax will be payable.
    That, I think, should solve the immediate problem but potentially far more worrying is what happens in the future.
    If the surviving parent continues to occupy the house then that parent's continuing half share interest will continue to qualify for Private Residence Relief but what is now your half share interest in the house is potentially liable to Capital Gains Tax when it is eventually sold unless the surviving parent's right to occupy has been preserved.
    Hopefully, the solicitor who terminated the will trust has preserved the surviving parent's right to occupy but if not, you need to get that corrected asap.
    I really don't think you need an accountant at this stage. You need to ensure that your solicitor has either done it right or can create a new trust to reinstate the surviving parent's right to occupy what you now own.
    • Ali71
    • By Ali71 16th Aug 17, 11:39 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    Hello Jimmo,


    Many thanks for your comment. Really helpful. It's kind of along the lines that I was thinking. Surviving parent has lived in the house for years and certainly since the Will Trust kicked in. How is the surviving parents right to occupy preserved please? Is this done by some sort of deed? Letters of intent attached to the will expressly states that survivor was to be allowed to remain in the house for the rest of life although I know these are not legally binding. The home will not be sold, by the way. Not in my lifetime anyway. Updated title deeds (copies) have now arrived from LR, who have valued the half share. I presume this is their own valuation, I suppose they should know!!
    Very grateful for your comments. My blood pressure is receding as I type.
    Many thanks.
    • Ali71
    • By Ali71 16th Aug 17, 11:50 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    Hello Jimmo,


    Many thanks for your comment. Really helpful. It's kind of along the lines that I was thinking. Surviving parent has lived in the house for years and certainly since the Will Trust kicked in. How is the surviving parents right to occupy preserved please? Is this done by some sort of deed? Letters of intent attached to the will expressly states that survivor was to be allowed to remain in the house for the rest of life although I know these are not legally binding. The home will not be sold, by the way. Not in my lifetime anyway. Updated title deeds (copies) have now arrived from LR, who have valued the half share. I presume this is their own valuation, I suppose they should know!!
    Very grateful for your comments. My blood pressure is receding as I type.
    Many thanks.
    • Ali71
    • By Ali71 16th Aug 17, 11:59 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    Sorry Jimmo, just re-read your various comments, yes surviving parent was a beneficiary, like me. And I think I meant letters of expression, not intent. And I note your comment about a trust. Is this relatively straight forward? Solicitor never mentioned this, would have asked if I'd known! Worth doing if it negates CGT. Many thanks.
    • Ali71
    • By Ali71 16th Aug 17, 12:01 PM
    • 20 Posts
    • 3 Thanks
    Ali71
    Looks like I posted twice. This must have been because MSE collapsed halfway through 1st reply.
    • Ali71
    • By Ali71 17th Aug 17, 10:57 AM
    • 20 Posts
    • 3 Thanks
    Ali71
    Further to the posting about creating new trust preserving the surviving parents right to occupy to mitigate CGT etc; I just thought, at the time the DOA's were done to effectively end the trust, I had a will drawn up, which stated that my parent had the right to continue living at the property until death, or could sell and move using the proceeds if that is what they wished. Would this count as said trust, or would a wholly separate document need to be drawn up purely regarding right to occupy for parent?


    Appreciate your help.
    • jimmo
    • By jimmo 19th Aug 17, 9:26 PM
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    jimmo
    As I said before, I don't know a lot about trusts but I am rather dubious that letters of intent/ expression (which you, yourself say are not legally binding,) would establish the surviving parent's right to occupy the house as a beneficiary of the will trust. The key issue here is not so much occupation of the house, it is the right to occupy as the beneficiary of the will trust.
    In my time as a taxman I would have 2 choices here:
    I could accept that the right to occupy as a beneficiary of the will trust existed or refer the matter to HMRC's solicitors.
    In reaching my decision on that I would need to consider:
    1) How much tax is likely to be involved.
    2) How long is it likely to take for a solicitor to provide the answer and how much will it cost HMRC compared to the potential tax yield?
    Note that I would not be concerned with how much it may cost you (or the will trust) to ask a solicitor to represent the trust, just how much it would cost HMRC.

    With regard to the period of your ownership (of a half share presumably) of the house if you are never going to sell it you are not going to realise a capital gain so any arguments are purely academic and hardly worth your spending any money on.
    However one of the problems with tax planning is that if you subsequently change your mind and decide to sell it will almost certainly be too late to do any tax planning then.
    Again, I am not happy with the concept that letters of intent/ expression can be considered to create a beneficiaries right to occupy. Even more so after the will trust has been terminated.
    Your will, it seems, will create a new will trust should the surviving parent also survive you. If so, that person will become a beneficiary from the date of your death but I think you probably now have a void period, from the date the property was assigned to you until you do something about it, where the surviving parent is not occupying the house as a beneficiary of a trust.
    Your solicitor may be able to point out something which already exists which negates my thinking or could perhaps create a document which establishes the surviving parent's right to occupy from now on.
    That is why I think you need legal advice rather than accountancy advice at this time.
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