Leaving property to minors

Icey77

My in-laws have told us that they have just updated their wills and intend to leave their investment property to my son and daughter (their grandchildren).

Obviously they could change their minds in the meantime and leave it all to the cats home but I feel this is unlikely, and I'm assuming the property would be left in a trust.

The property is currently let out and the tenant is planning to stay long term, what would need to be done regards the income generated by the property for my children?

Is it fully taxable bearing mind they are children (2 & newborn)?

Not sure what else to ask really just wondering what into anyone could share!

Thanks

TBagpuss

It would depend on the wording of the trust. It is essential that they get proper legal advice.
If the arrangements said that the income belonged to the children, then it would be like any other income, and would be taxable if it was more than their tax free allowance.

Obviously the trust would become the landlord of the property and they would have to make provision for the running costs of the property to be met, and be sure that the trustees were comfortable to take that responsibility on.

It may be that the terms of the will would allow the executors or trustees to sell the property and invest the money for the children in a way which did not require such 'hands-on' management on a day to day basis.

of course, his is very much up to your in-laws, who may not chose to discuss the details with you.

specialboy

Are the in laws likely to pop off in the near future? If not then I wouldn't worry about anything.

peachyprice

Bloody hell, talk about counting your chickens, they're not dead yet.

Worry about it when they've both popped their clogs, because before that it's nothing to do with you or your children. They may even have sold the property by then or used it to pay for care homes.

Icey77

They've made it very clear that it is our business, despite us telling them it's their property and belongings etc to leave to whomever they wish. I'm very involved in their finances already as I do their tax returns as they the rental income that needs to be declared.

I'm not being grasping or money grabbing, simply asking a question so that I can have an idea of what I may be required to do at some point in the future. I'm fully aware they may change their wills - I even wrote this in the first post.

Icey77

specialboy wrote: »

Are the in laws likely to pop off in the near future? If not then I wouldn't worry about anything.

Actually, it is something to be concerned about as they are in their late seventies and not in the best if health. It's fair to say it's unlikely that they will be here to see my childrens 18th birthdays.

Obviously, I'd have it otherwise but being realistic it's unlikely.

Mojisola

peachyprice wrote: »

Worry about it when they've both popped their clogs, because before that it's nothing to do with you or your children. They may even have sold the property by then or used it to pay for care homes.

I don't understand this attitude - it's hard enough to cope with practicalities when you're grieving for a loved one without having to start from a position of zero knowledge.

If the grandparents have made it known that they plan to leave property to the grandchildren, it's worth finding out in advance just how that would work in practice.

If the property isn't still in their ownership by the time of their death, then there won't be a problem; if it is, Icey77 will be aware of what has to be done.

John_Pierpoint

In the absence of setting up a fancy trust, the executors would simply continue collection the rents and repairing the property until the beneficiaries could have the legal title transferred to them at the age of 18. They would be acting as "bare trustees".
The parents would report the rental income received from the executor/trustees the tax man in the name of the child.

Some children are almost middle aged at the age of 18 - some still seem to have less sense than the average 10 year old in matters of money.

It is largely a family matter, which should be discussed and understood in advance of coming into an inheritance.

Traditionally it was possible to retain the assets until the children were 25 and hopefully by then got over teenage stupidity; Such trusts were called accumulation & maintenance trusts giving the trustees control over both capital and income, however in 2006 Gordon Brown decided the age of maturity (and personal tax-ability) was 18, so the tax treatment of 18 + trusts is now more complex unless, the beneficiary takes full rights to the assets and their income on their 18th birthday.