Need help & advice with regards to reinvesting in a house through a trust.......

phil-007_3

Hi - I need some help & advice and it is quite complicated - hopefully someone may have been in a similar situation.... 3 years ago my nan died and she left her house in trust to my mum, my sister & I with a life interest in it for my mum - i.e so my mum would always have a roof over her head. The reason it was left in trust is because my nan knew that my mum had large debts and she wanted to ensure that the house proceeds would be protected from her creditors. Ok - fast forward three years and we have managed to sell the house ( we had to sell because it needed so much work and we could not afford to do it ) for way below the market value (£82k) and we are now looking to invest this money into another house to be held in trust as before. Unfortunately we do not have enough money to buy the house that we are interested in outright.... so my simple plan was to fund the difference by myself and my hubby getting a mortgage for the difference - in principle not a problem. However...... I have been to see a solicitor this afternoon who has said that it would not be possible to get a mortgage on the house because the mortgage lender would not be happy to lend on a house that is split between us and the trust - and plus there are numerous other complicated issues and conflicts of interests..... SO she suggested that the simple answer would be for the trust (my sister, mum and I) to get a mortgage - the problem with this is I think it is a non starter because I am the only one with a decent credit history!!!!!!!!!!!!!!!! Argh... I also don't want to flag any issues with mum s debt collectors as she is doing ok just paying small monthly amounts at the minute. I don't know what to do and the solictior was so negative & i just want to help my mum get a house and we can afford the mortgage. I came away from the solicitors in tears!!!


Sorry for lenghty posting but I would be grateful of any pointers.:(

dimbo61

You have a bank ac!!!! with £82,000 in it which belongs to the 3 off you !
Mum ,sister and yourself so why not split the money and all 3 of you can do what they like with it !
There maybe enough to clear mum,s debts and for you to clear some of your mortgage and keep a small savings pot.

Meeper

Solicitor wasn't negative. (S)he was realistic and experienced.

phil-007_3

dimbo61 wrote: »

You have a bank ac!!!! with £82,000 in it which belongs to the 3 off you !
Mum ,sister and yourself so why not split the money and all 3 of you can do what they like with it !
There maybe enough to clear mum,s debts and for you to clear some of your mortgage and keep a small savings pot.

Not an option - the will was written so that only my mum should benefit. And she is renting at the minute so we want to get her a house and asome security. Thanks for response.

phil-007_3

Meeper wrote: »

Solicitor wasn't negative. (S)he was realistic and experienced.

Probably so but there must be other options - I am not sure that she was experienced in trusts enough - may seek a second opinion.

Meeper

phil-007 wrote: »

Not an option - the will was written so that only my mum should benefit. And she is renting at the minute so we want to get her a house and asome security. Thanks for response.

The instructions of the will do not supercede the instructions of the trust deed. If the trust deed stated that your mum should retain a lifetime interest in the property, did it allow for the trustees to sell the property? Presumeably it did, as you have sold it. Now that there is no property for your mum to have a lifetime interest in, does the trust therefore give her a lifetime interest in the proceeds of sale? If so, can she not just have the money to put herself in a better position?

phil-007_3

Meeper wrote: »

The instructions of the will do not supercede the instructions of the trust deed. If the trust deed stated that your mum should retain a lifetime interest in the property, did it allow for the trustees to sell the property? Presumeably it did, as you have sold it. Now that there is no property for your mum to have a lifetime interest in, does the trust therefore give her a lifetime interest in the proceeds of sale? If so, can she not just have the money to put herself in a better position?

we have had a deed of variation drawn up which states that the proceeds should be reinvested in a property with a lifetime interest. needs to be kept in trust to protect mum from her creditors coming after the money

Meeper

Then I'm afraid your option is to buy a property for the amount of money you have realised from the sale of the original one.

DVardysShadow

phil-007 wrote: »

... Unfortunately we do not have enough money to buy the house that we are interested in outright.... so my simple plan was to fund the difference by myself and my hubby getting a mortgage for the difference - in principle not a problem. However...... I have been to see a solicitor this afternoon who has said that it would not be possible to get a mortgage on the house because the mortgage lender would not be happy to lend on a house that is split between us and the trust - and plus there are numerous other complicated issues and conflicts of interests..... SO she suggested that the simple answer would be for the trust (my sister, mum and I) to get a mortgage - the problem with this is I think it is a non starter because I am the only one with a decent credit history!!!!!!!!!!!!!!!! Argh...

Are you able to take a mortgage on your own property to fund the difference? You could then protect your interests in the property held by the trust by an arrangement with the trust which 3rd parties could not intervene to stop.

getmore4less

If not happy with the solicitor go back to the one that did the DOV


Not sure trusts can have mortgages in their own right, if they can I don't think your own financs are relevent the trust is the legal entity and has no income to fund a mortgage.

Who are the trustees?

It looks like the setting of the trust and sale of the house were not thought through properly.

One option might be to just fund the rent from the income/cash.


Where was she living before she inherited life interest in a house why does that need to change?

Thrugelmir

phil-007 wrote: »

it would not be possible to get a mortgage on the house because the mortgage lender would not be happy to lend on a house that is split between us and the trust (

The mortgage lender would require all those named on the title deeds to also be party to the mortgage.

This is irrespective of any trust set-up.