Property Trust in Parents Will

ijb

Hi,

My parents recently had mirror wills created as part of will month (2012). They have started to ask me about avoiding having to sell the house to pay for care home fees should the need arise. There is no sign of needing care at this stage

I've explained that they may want to be able to choose a nicer care home and that we (3 children) would rather they did that than give us the house but they are saying that they have worked hard to build up something to pass to the children.

The wills that they have are very straightforward and appoint me as sole executor and trustee. It then contains the clause:

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6. My trustees shall hold my estate on trust to retain or sell it and:-

(a)
i.) To pay debts and executorship expenses
ii.) To pay any inheritance tax in respect of property passing under this Will.

(b.) To hold the residue of my estate (“my residuary estate”) upon trust for my wife [Name] but if she shall predecease me then to divide my residuary estate equally between such of my children the said [child 1] [child 2] and [child 3] as shall be living at my death and if more than one in equal shares absolutely.

---

Am I correct in interpreting this as that on first death, the house would form part of the residual estate and would pass to me as the trustee and allow the surviving parent to continue to live there. There is no mention of the property anywhere else in the will.

If so, do we also need to change my parent ownership of the property to 'tenants in common' to complete the process?

My mother has recently been offered a property trust for £480 and they contacted their original will writers who said it would be £600 to do the same. On reading the will I think it may already be covered.

If it makes any difference then the entire estate is unlikely to be near the IHT threshold.

Any advice gratefully received.

Ian

Mojisola

ijb wrote: »

6. My trustees shall hold my estate on trust to retain or sell it and:-

(a)
i.) To pay debts and executorship expenses
ii.) To pay any inheritance tax in respect of property passing under this Will.

(b.) To hold the residue of my estate (“my residuary estate”) upon trust for my wife [Name] but if she shall predecease me then to divide my residuary estate equally between such of my children the said [child 1] [child 2] and [child 3] as shall be living at my death and if more than one in equal shares absolutely.

---

Am I correct in interpreting this as that on first death, the house would form part of the residual estate and would pass to me as the trustee and allow the surviving parent to continue to live there. There is no mention of the property anywhere else in the will.

If so, do we also need to change my parent ownership of the property to 'tenants in common' to complete the process?

If your parents own their house as joint tenants, then when the first one dies, the house will not form part of their estate.

When you are joint tenants, you both own the whole house. When one of you dies, the survivor still owns the whole house.

ijb

Thanks for the speedy response Mojisola.

So by changing to TIC then it would form part of the first death's estate?

Would the clause listed then put that share in trust allowing the surviving partner to remain in the property but protecting that share is care was needed for the survivor?

Thanks again,

Ian

Mojisola

ijb wrote: »

So by changing to TIC then it would form part of the first death's estate?

Would the clause listed then put that share in trust allowing the surviving partner to remain in the property but protecting that share is care was needed for the survivor?

In the wills I've seen, there is a more complicated clause, giving the survivor the right to stay in the property but with the responsibility to maintain it and also the right to sell and move to another property using the value of the whole house.

Mojisola

ijb wrote: »

(b.) To hold the residue of my estate (“my residuary estate”) upon trust for my wife [Name] but if she shall predecease me then to divide my residuary estate equally between such of my children the said [child 1] [child 2] and [child 3] as shall be living at my death and if more than one in equal shares absolutely.

Just a comment on this. If one of the children dies before the parents but leaves offspring (grandchildren), the grandchildren wouldn't receive anything. Is that the intention?

daska

That's the idea. Essentially the way it works is that the surviving spouse doesn't actually inherit the estate of the deceased. The estate passes into a Trust which then loans it to the survivor. In most cases this is a purely paper exercise as the estate is tied up in a property which isn't sold. This loan can be secured against the property if there's any worry that the surviving spouse might 'lose' the money (either deliberately or as the result of dementia/ fraud/ coercion etc).

Is that the extent of the wording. Mum's Will was a deal more complex that what you've quoted and left the residue of the estate in Trust to be used for the benefit of any of her children and grandchildren.

Fire_Fox

Don't deal with will writers, see a proper solicitor.

ijb

Thanks for the replies. Fire fox, although I said will writers it was a solicitors that my parents used.