probate with discretionary trust

nellyw2639

I recently lost my father who had a discretionary trust in place at the time of his death. As my mum is still alive and everything will pass to her under the spouse exemption rule we do not feel that probate will be too complicated. The solicitors have estimated a fee of £5,000 which we feel is over the top so we will undertake probate ourselves.

We have been considering nullifying the trust as due to the changes in law it no longer offers the IHT savings it was set up for. Can we obtain probate with the trust in place and then nullify the trust later (we have to wait a minimum of 3 months from his death to do so) and when we nullify the trust will the ownership of the property revert to sole ownership as opposed to Tennants in Common which is currently in place to facilitate the trust?

Thanks

sloughflint

nellyw2639 wrote: »

I recently lost my father who had a discretionary trust in place at the time of his death. As my mum is still alive and everything will pass to her under the spouse exemption rule we do not feel that probate will be too complicated. The solicitors have estimated a fee of £5,000 which we feel is over the top so we will undertake probate ourselves.

We have been considering nullifying the trust as due to the changes in law it no longer offers the IHT savings it was set up for. Can we obtain probate with the trust in place and then nullify the trust later (we have to wait a minimum of 3 months from his death to do so) and when we nullify the trust will the ownership of the property revert to sole ownership as opposed to Tennants in Common which is currently in place to facilitate the trust?

Thanks

I think the Trustees can choose to transfer all the assets in the Trust to your mother ( and she would then be able to uplift her late spouse's IHT allowance in the future).

This would involve signing a Deed of appointment. I would imagine that would not cost too much to do and you do the rest..

Shop around for prices?

The technicalities of what you are doing with the Trust within the Will shouldn't affect probate I'd have thought but seek clarification with a few phone calls.

The IHT and probate helpline is very helpful:

http://search3.openobjects.com/kbroker/hmrc/contactus/search.ladv?raction=view&fl0=__dsid%3A&sm=0&ha=34&as=1&sf=&sp_scope=hmrc&sc=hmrc&nh=10&sr=0&cs=ISO-8859-1&tx1=&tx0=370329

withnell

Google for info on probate - my father did it for his father, had to go for appointment at local probate office (there aren't that many of them, only in major cities) but everything was straightforward

nellyw2639

Thanks very much for your help.

wombat42_2

Surely DiscretionaryTrust means just that - discretionary.

Incidentally does anyone know if the non property parts of a discretionary trust are active even the ownership is Joint Tenants instead of Tenants in Common ?

caveat_emptor

Asked our solicitor whether I should make any changes to our discretionary will trust in view of changes to IHT and he advised against change on basis that it was more flexible than ordinary will.

sloughflint

wombat42 wrote: »

Surely DiscretionaryTrust means just that - discretionary.

Incidentally does anyone know if the non property parts of a discretionary trust are active even the ownership is Joint Tenants instead of Tenants in Common ?

Not sure what you meant here. Property owned as joint tenants passes outside a Will/Trust.

wombat42_2

sloughflint wrote: »

Not sure what you meant here. Property owned as joint tenants passes outside a Will/Trust.

Hi Sloughflint. As it is the title deeds which specify joint tenants or tenants in common, i assumed that it may only impact the property aspect of any discretionary trust. I was wondering if it also impacted any non-property aspect of any discretionary trust such as savings and investments .

sloughflint

I'm sorry wombat42. I'm still unclear what you mean but then I have a very limited knowledge on this sort of thing ( similar position to OP).

My understanding was that a DT was flexible enough to contain a variety of assets up to the value of the Nil Rate Band at the time of death. If a property was owned as tenants in common, then the deceased's share could be included within the Trust if one wished or not if other assets filled up the NRB. However if a property is jointly owned then there is no choice. It passes automatically to the survivor. HTH.

caveat_emptor wrote: »

Asked our solicitor whether I should make any changes to our discretionary will trust in view of changes to IHT and he advised against change on basis that it was more flexible than ordinary will.

I think this is slightly different from what Op was asking. I guess your solicitor is advising you to keep your Discretionary Trust Wills whereas Op is wondering how to deal with things after the first death.

There are ongoing cost implications with discretionary trusts and the NRB is frozen at time of death as opposed to a doubling of the NRB applicable at the time of the second death.

wombat42_2

Sloughflint, Looking at various links on the net it defines "property" as

"The word 'property' for inheritance tax purposes includes all types of asset, cash, stocks and shares etc as well as land and buildings, including all rights and interests of any description that are legally enforceable."


So I think I am becoming clear in my mind that the Title Deeds have to specify "Tennants In common" for anything in a will (particularly any discretionary trust) to be enabled.

It looks to me that as cash, stocks and shares etc are considered "property" they will be included even though the title deeds themselves only relate to the buliding.

nellyw2639

Hi Slough

I'm with you on winding up the trust, the word nullify was probably a bad choice!

I agree 5K seems an awful lot to me too, perhaps they feel that when people are distressed they will just accept what they say as they can't think straight!