Executor - Question about a Trust

Dillence

Hi

My father died last February and his will left his estate in a discretionary trust to my mum, my brother and myself. However we were told at the time that we had 2 years to set up the trust, if we wanted to set it up.

We were in the process of setting up the trust with a solicitor when my mum died, no paper work had been signed.

I am now trying to sort out my mothers estate and am confused about whether the trust is actually set up for the purposes of her estate or not.

I thought that I would try here before seeing a solicitor, if I really have to.

Thanks

Dillence

kunekune

My take on this is that because you are all over 18 and of sound mind, any trust that was set up, you could straight away bring to an end (Saunders v Vautier). Therefore, if none of you wanted it to be a trust, you could instead choose to receive the money up front. In order for the trust to be completely constituted, the trust property would have to be transferred to the trustees. from what you say, that didn't happen.

My guess is that it doesn't make any difference that your mother has died (sorry about that, not a good time for you I guess). So you could still all choose to take straightaway rather than via a discretionary trust. Or you could choose to have it as a trust (may be tax advantages?). Since it was discretionary, it doesn't make much difference how many beneficiaries there are.

However ... I think you do need to talk to the executors (since there is no trust, presumably they still have the property?) and get their advice. That may involve them consulting solicitors, if they aren't solicitors, and that would be at the expense of the estate.

This may be a confusing answer: do ask again if it isn't clear.

Dillence

Hi

Thanks for your reply. Just me and my brother are the only executors and beneficiaries. He is leaving the executor duties to me.

I am trying to fill in form IHT205 for the inland revenue and it asks questions like assets held in trust for the benefit of the deceased - so if I close the trusts - can I answer 'NIL' to this???

My solicitor has told me that I really need to see her 3 months after my mums death to officially close the trusts (can't remember the name of the deed)

Many Thanks for your help.

Dillence

clairehi

I think the phrase you mention "assets held in trust for the benefit of the deceased" refers to any other trust that your dad was a beneficiary of. Not a trust set up by his will for the benefit of others.

Suggest you phone the HMRC IHT helpline to check the meaning of the question with them - I found them very helpful. The phone number will be on the form or guidance somewhere.

If you are still unsure after talking to HMRC then go back to the solicitor.

Dillence

Thanks.

Just wondered if anyone else had dealt with this, before I start ringing round.

roger196

There are two issues here. The first is the termination of the discretionary trust. Are you and your brother in agreement as to how the capital should be split up if the trust is bought to an end.
The second is a deed of family arrangement whereby the beneficiaies, if they agree, can re-write dad's will so that it is most effective IHT wise not only for him but for the next generation. The time limit for this is, if my memory serves me correctly, two years from the date of death. For example if both you and brother have adequate capital, it may be the time to make your children beneficiaries in your place ( with possibly a discretionary trust if you don't want want them to blow the money on fast horses and booze). It may be useful to route some assets though your mum's estate to minimise IHT but you need to look at that will to make sure that the IHT savings/ capital do not end up in the cats' home. Again a deed of family arrangement may be useful on your mum's will.
Good estate planning also requires an estimate of your life expectancies.
Have you made your own will, which may need revising in the light of the capital that you will inherit.

Dillence

I contacted the probate and then the trust office but they weren't really able to help. Eventually contracted the solicitor who told me that my dads trust was never set up so we don't have to do that now.

My dads share of the house will pass directly to the beneficiaries and then I just complete the application for probate as though there was never the thought of a trust.

Just need to set up a will for me now.

Thanks to all for your comments.