probate with discretionary trust

Stang

When my father died 2 years ago I paid the solicitor £850

Mikeyorks

Get all the Trustees bar your Mother to formally renounce their interest when you apply for Probate. That leaves her as the sole Trustee ..... and the Trust (you'll need to look at her Will ..... it will probably need redrawing / simplifying as it will be mirror image to your Fathers) will simply collapse on her death.

Bit more complex if the Solr partners are the other Trustees? You need to talk very nicely to them!

Mimics what I did with the same situation a couple of years ago. But did help that our Solrs are family related ..... so getting them to back off and out wasn't too difficult. But I left all the Deeds etc with them - as a potential sweetner idc.

sdooley

sloughflint wrote: »

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..

Spot on. It is the trustee's choice whether they do this or not. After the deed of appointment they would also transfer the legal title to all the property into your mother's name.

The only obvious reason the trustees might not do this is if your father had written a private letter of wishes to the trustees saying he did not want this to happen. This is common where people have children by a previous marriage for example. The trust can ensure any money needed for one's widow is made available to her, but anything not needed can be kept for all the children not just those by the present marriage.

Nothing in the original post to suggest this, but divorce is so common...

sloughflint

Mikeyorks wrote: »

Get all the Trustees bar your Mother to formally renounce their interest when you apply for Probate. That leaves her as the sole Trustee ..... and the Trust (you'll need to look at her Will ..... it will probably need redrawing / simplifying as it will be mirror image to your Fathers) will simply collapse on her death.

Would that work from the uplifting of the NRB angle though?
With a DT in place, first death in 2008 and second in 2010, the combined NRB is 312+ 350 =662k

No DT in place, with same timings of death, the combined NRB would be 700k.

Baggysdad

The discretionary trust needs to be created and then the capital appointed out (transferred) to mum. This will involve transferring the property out of mum and dads names as tenants in common into mums sole name.

£5,000 is way over the top for fees - it needs to be about a fifth of that for professional fees and a couple of hundred pounds for the conveyancing work.
Many solicitors are sitting at their desk twiddling their thumbs at the moment......

That is assuming that you are confident that mum won't need care in the future, or if she does, you are not bothered about losing what was in the trust to pay for care fees. It may be worth keeping the trust to shelter the trust assets from any possible future means tests even though the IHT advantage is now irrelevant. Depending on whether the wording of the Will allows it, it might be worth converting the discretionary trust into a life interest trust, which has even better potential to shelter assets from care fees.

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.

While a discretionary will trust is more flexible than an 'ordinary Will', an 'ordinary Will' is not the only option to a discretionary trust will. See above for the hint. And as Sloughflint has pointed out, if your estate is above double the IHT threshold, the existence of the Discretionary trust has the effect of reducing the combined tax allowances and therefore making the tax position WORSE.

sloughflint

Baggysdad wrote: »

That is assuming that you are confident that mum won't need care in the future, or if she does, you are not bothered about losing what was in the trust to pay for care fees.

I never did quite understand this way of thinking at the time.

I was under the impression that it was the Trustees' duty to consider the beneficaries and primarily the surviving spouse's needs.
If the spouse required care, then the contents of the Trust would be dipped into if need be. So it would make no difference whether the assets were inside or outside a Trust other than the LA didn't call the shots, the Trustees did.

I'm afraid I saw the process purely as an IHT/ongoing cost saving exercise.

Wouldn't there be an obligation for the trustees to discuss all implications before appointing out the contents of the trust ?

Baggysdad wrote: »

Depending on whether the wording of the Will allows it, it might be worth converting the discretionary trust into a life interest trust, which has even better potential to shelter assets from care fees.

If that is important to the family and the wording of the Will doesn't allow it, could a deed of variation work to provide the care fee planning advantages of the life interest trust and also therefore full IHT allowance capacity or is that not possible here?

wombat42_2

As a side issue, in the situation where, say, the husband dies leaving everything automatically to the wife (Joint Tenants not Tenants in Common), what documentation is required to give to the banks and building societies etc to get them to transfer the husbands assets to the wife ?

Obviously a copy of the death certificate would be one document required and i would have thought a copy of the title deeds was necessary so it could be seen if Joint Tenants or Tenants in Common was in place.

milla

wombat42 wrote: »

As a side issue, in the situation where, say, the husband dies leaving everything automatically to the wife (Joint Tenants not Tenants in Common), what documentation is required to give to the banks and building societies etc to get them to transfer the husbands assets to the wife ?

Obviously a copy of the death certificate would be one document required and i would have thought a copy of the title deeds was necessary so it could be seen if Joint Tenants or Tenants in Common was in place.

You would also need the Grant of Probate

wombat42_2

milla wrote: »

You would also need the Grant of Probate

Why, surely the will is surely completely ignored if Joint Tennants.

milla

Hi Wombat

Just going off what happened with my Dad ............I'm fairly certain the banks still wanted Grant of Probate for anything in Mum's name . Sorry if this is wrong ......................