probate with discretionary trust

sloughflint

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.

Just as with joint tenancy owned property ( home), joint accounts automatically become the survivor's account. Banks will need to be notified of course of the death ( certificate) and tax certificates issued.

Most accounts in sole name will be frozen until probate granted.

wombat42_2

sloughflint wrote: »

Just as with joint tenancy owned property ( home), joint accounts automatically become the survivor's account. Banks will need to be notified of course of the death ( certificate) and tax certificates issued.

Most accounts in sole name will be frozen until probate granted.

I think you are saying that if joint tenancy then joint accounts are automatically transfered.

But for accounts in a sole name (with joint tenancy), probate is still required - but does that mean that anything in the will is still disregarded (including trusts) ?

sloughflint

wombat42 wrote: »

I think you are saying that if joint tenancy then joint accounts are automatically transfered.

But for accounts in a sole name (with joint tenancy ), probate is still required - but does that mean that anything in the will is still disregarded (including trusts) ?

I'm not sure you understand the meaning of joint tenancy wombat.

Two people can hold a joint account. Upon death the survivor owns the account and it converts into a sole named account.

An account in sole name is just that. ometimes if there are small funds in the account, a grant of probate doesn't need to be presented.

A home can be owned by two people in two ways:
joint tenancy
or tenants in common where each person owns a share;not necessarily 50-50.

HTH

These links are quite good:
http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/Preparation/DG_10029799

http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/Preparation/DG_10029468

wombat42_2

Sloughflint i entirely agree and understand with what you have just said. I was trying to get my head round the disposal of savings where the Title Deeds indicate "Joint Tenant". According to this info from your link:

"A grant is almost always needed when the person who dies leaves one or more of the following:

• £5,000
• stocks or shares
• certain insurance policies
• property or land held in their own name or as 'tenants in common'"

.....so it seems that contents of the will are considered (including any discretionary trust) for the disposal of savings, stocks, and shares but not for the property itself (that is building and land) if the Title Deeds indicates "Joint Tenant".

Baggysdad

In response to post 18.

Sorry but there isn't a simple way to respond to this - here goes:

With a Discretionary Trust assets held in the trust are not owned by the person needing care - and are therefore excluded from means testing. But the creation of the trust uses up the NRB available on first death. Furthermore, CGT is possibly payable on any capital growth in the house if its held in a Discretionary Trust - it depends on the wording in the Will.

You could argue that the CGT issue can be resolved if the Discretionary Trust has powers for the trustees to accept an IOU in satisfaction of the transfer of the house into the trust. The surviving spouse then owns the whole house, lives in it and the CGT issue has gone away because principal private residence relief applies. But from a care fee point, there is a contentious point that by keeping half of the house in a trust, the value for means testing is arguably zero - because nobody would buy half a house when the other half is owned in a trust. So you end up playing CGT and using up the NRB on st death against potential care fees mitigation.

With a life interest trust, assets held in the trust are not owned by the person needing care - and are therefore excluded from means testing - as with a Discretionary Trust. The creation of the trust is something called an Immediate Post Death Interest (IPDI) and therefore does not use the NRB available on 1st death. CGT is an issue because principal residence relief is available if the house is occupied by the surviving spouse. And because half of the value of the house is in the life interest trust, the 'half a house is worth nothing' argument can be played. So, CGT isn't an issue, the NRB hasn't been used and you get to mitigate care fees. And all round winner?


As regards using a Deed of Variation to replace a Discretionary Trust with a Life Interest Trust - it is possible, but it requires the agreement of all of the potential beneficiaries of the Discretionary Trust. Since many Discretionary Trusts include children, grandchildren and great grandchildren, some of whom are bound to be under 18 and cannot be party to a Deed of Variation, in practice its rarely an option.


In response to Wombat42

Sole assets and assets held as Tenants in common (doesn't matter what they are, bank account, property - whatever) form part of the deceased estate and are distributed by the Will (or intestacy if there is no Will). These assets will require a Grant of Probate (or Letters of Administration if there is no Will) to administer them - unless the total value of the assets is below £5,000.

Assets held as joint tenants (doesn't matter what they are, bank account, property - whatever) pass to the surviving owner, regardless of what is in a Will, regardless of whether there is a Will. Consequently a Grant of Probate is not required to administer assets held as joint tenants.

Hope this helps.

sloughflint

Baggysdad wrote: »

In response to post 18.

:T:T:T:T:T:T

What a superbly informative post.Thank you for going to all that effort and I'm terribly sorry if I misled you with my post and looking back at it, it wasn't clear.

What I meant in my post was far more simplistic.
For a family such as mine which wasn't concerned about the care fees aspect ( if care was ever required, the intention would have been to dip into the Trust to provide the best care possible anyway in the unlikely event of the surviving spouse's own assets having run out), I couldn't see the point in continuing with the DT exercise after the rule chaanges when the IHT equation would be less favourable anyway.:o:o:o

The DOV impracticalities for some make sense.

Also I had not realised the 5k limit was for total assets. I had always assumed it was per bank.

Mikeyorks

sloughflint wrote: »

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.

Academic in my case as IHT was never going to be an issue ..... the entire rationale of the Trust was the potential avoidance of 50% of the property value being taken into account for Care fees. But my concern, on discovering this, was that the remaining Trustees (unnamed partners with the Solrs) after the 2nd death .... would become the sole Exors under the terms of the mirror image Wills.

I won't go any further as Baggysdad has clarified the situation vis a vis Care fees far better than I could have done. But I'm extremely pleased that we engineered the Trust / amended the 2nd will in the way we did. As the 2nd death has happened at distressing proximity to the 1st ...... and it leaves me to deal with the Estate without the unnecessary inconvenience of a Trust and Solicitors complicating and elongating a process I need to draw a fairly rapid close on.

sloughflint

Mikeyorks wrote: »

Academic in my case as IHT was never going to be an issue .....

But was for the OP,Mike.

nellyw2639 wrote: »

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.

amethystcash

Just a few thoughts...

We went through confirmation (Scottish version of probate) last year for a relative and I'm sure that at the time we were advised that the fee structure was regulated and that the solicitor could only claim fees up to a maximum of I think 2% of the value of the estate. The solicitor should also provide fee information upfront. Bear in mind they do charge what might seem like ridiculous amounts such as £15 per letter, £10 per phone call etc. If you think that you are being quoted too much ask them in detail what they will be doing for you and how much each element is likely to cost.

We did a lot of the donkey work letter writing ourselves e.g. for closing accounts, pension confirmations, insurances etc, so that we could cut down on those sorts of charges - maybe that's worth thinking about and letting the solicitor concentrate on the trust/property elements which are likely to be more involved.

nellyw2639

All they said was an estimate of £5000. The lady doing it was charging £150 per hour. The above posts have confirmed my view that it is easily done ourselves so that is what we shall do. We have already done all the donkey work so all that is left to do is obtain probate and get grants of probate info to the few investments that were in my dad'd sole name.

There are no complications with the trust as everything is left to my mum as it was purely a vehicle to avoid IHT.

We will get the deed of appointment sorted out after the 3 month period and then get the will adjusted.

Thanks everyone