Nil Rate Band Discretionary Trust Deed of Appointment

becrrw

My Grandfather passed away in December 2004 and his solicitor then created a Nil Rate Band Discretionary Trust of which my Mother was the potential beneficiary. There were 2 trustees - my Mother and the Solicitor.


In 2007 my Grandmother needed care and decided to move so the solicitor sent a letter to my Grandmother explaining the Trustees who had previously agreed that she could borrow that sum from the Trust had now 'decided to appoint that sum to her absolutely'.


My Grandmother then passed away in 2013 and the same solicitor is joint executor on her Will, along with my Mother. Two years following her death we are now in a position where HMRC are willing to permit my Grandfather's Nil Rate Band being included along with my Grandmother's but are asking for documental evidence by means of a Deed of Appointment.


The solicitor has said there was no Deed of Appointment which they can find, only that letter which in their view has the same effect as a deed. The revenue have not accepted the letter as enough evidence and have said they do want to see a Deed of Appointment.


I'm not sure what position that leaves us in - surely the Deed of Appointment would have had to be a document that existed as something must have been signed by the Trustees (my Mother and the Solicitor) to have allowed the trust to be appointed to my Grandmother? Is this something the Solicitor may have lost or it wasn't necessary to produce at the time?


Any advice would be very gratefully received as this will make a difference between no inheritance tax being payable on my Grandmother's Estate and will draw an end to this long and tiring battle for my poor Mother.


Thank you

SeniorSam

A deed of appointment should have been drawn up by the solicitors. If this was not done, then the solicitor is at fault and responsible.

As a professional, the solicitor has a responsibility and duty of care to have done whatever is necessary and if an ommission, or oversight causes any loss to the Trust or the beneficiaries, then it is the solicitor who has to correct this.

His practice is covered by a professional indemnity policy which all solicitors have to have in place whilst in practice. Therefore ask the solicitor to either find the document, if he drew it up, or indemnify any loss.

Sam

Crabapple

A Deed is a very specific document with rules such as it has to be signed as a Deed (which usually means it says that on it) and all parties sign and witness it.

A letter is never going to be the same and you shouldn't appoint assets out of a Trust without it being done formally by Deed.

As seniorsam says, the solicitors need to sort it.

becrrw

Thank you both. This was what my gut was telling me but I needed confirmation before being able to argue with confidence! We have just written to ask the solicitor to find the document and pointed out the value of that single document in monetary terms.

I am predicting they will respond by saying it just does not exist and expect that to be the end of it with my Mother just accepting it. Grind someone down for two years and they definitely do feel like giving up, but this screamed negligence.

Thanks again.

SeniorSam

If anyone feels that they have not been treated fairly or correctly by any solicitor, the Law Society can take action to investigate matters and set things right if errors have been made.

If you feel that the solicitor in this case is in error and he does not offer to correct it, you need initially to inform him in writing that you wish to complain about this matter and will be making a formal to the Law Society. This may spur him into action. If not, then take the complaint to the Law Society

Do you know if the solicitor is STEP qualified, as it seems doubtful from what you have told us so far. If not and you wish to retain a solicitor as an executor, I suggest the other executors consider changing to a STEP solicitor.

Sam

g6jns_2

SeniorSam wrote: »

If anyone feels that they have not been treated fairly or correctly by any solicitor, the Law Society can take action to investigate matters and set things right if errors have been made.

If you feel that the solicitor in this case is in error and he does not offer to correct it, you need initially to inform him in writing that you wish to complain about this matter and will be making a formal to the Law Society. This may spur him into action. If not, then take the complaint to the Law Society

Do you know if the solicitor is STEP qualified, as it seems doubtful from what you have told us so far. If not and you wish to retain a solicitor as an executor, I suggest the other executors consider changing to a STEP solicitor.

Sam

It is the solicitors Regulatory Authority these days AFAIK. In any case the solicitor's own complaints procedure has to be tried first.

SeniorSam

I stand corrected.

It is in fact the SRA Solicitors Regulatory Authority these days. It was The Law Society who governed in my day, but the policing is now a seperate organisation to give a better service.

I have already said that the client should write to the soicitors, advising them of thier complaint and then to the governing body if they do not receive satisfaction.

Sam

getmore4less

HMRC say they need the deed to use the transferable nill rate band and a deed was needed to let the funds out of the trust and this don't exist.

Can you not revert to the assets still being a loan from the trust that is still repayable reducing the assets of the GM.

becrrw

SeniorSam - I googled STEP solicitor as I wasn't sure what this was and carried out a search on their website and it doesn't appear that they are a STEP qualified solicitor.


getmore4less - I think I understood what you suggested - that if there is no Deed then the Trust still exists? I have wondered this myself.


I will give more details on what has happened so far as I'm not sure that is plausible anymore. Forgive the long-windedness of the following as I have already explained much of it but I have no idea what points may be of critical importance in order to filter the information for you.


March '14
IHT400 filled out incorrectly by solicitor. Corrected by ourselves and all corrections accepted by solicitor as their errors. One point being 'I can see that no assets in fact passed into the Nil Rate Band Discretionary Trust. Instead, it had only the benefit of a charge/debt against the assets which were held initially in the hands of the Executors and then passed to (my Grandmother). I therefore agree that this box should be ticked Yes and the application for the transfer of the nil rate band made.


June '14
HMRC requested a copy of the distribution accounts for the estate of my Grandfather and a copy of the IHT205 form submitted at his death.
They noted that the nil band rate sum at his death was then loaned to my Grandmother via a Deed of Variation in 2007 while a deed of Charge for the same amount was executed a year before in 2006.
They asked the solicitor if the existence of my Grandfather's trust had been reported to HMRC.
They asked how the solicitor proposes to deal with the indexed element of the repayment of the loan for income and capital gains tax purposes.


July '14
Solicitor advised use of an accountant over the previous point.


August '14
Solicitor replied to HMRC enclosing my Grandfather's IHT200 submitted on his death and said that the existence of the Nil Rate Band Trust was not reported to HMRC at the time.


October '14
Response from the accountant was submitted to HMRC explaining why no capital gains tax was owed.


January '15
HMRC said as both loans were repaid prior to the death of my Grandmother they have no further query about the loans agreement but the existence of the nil band rate discretionary trust at my Grandfather's death means that his nil rate band was used and therefore cannot be transferred to the estate of my Grandmother unless documental evidence of a Deed of Appointment can be supplied.


January '15
Solicitor says 'there was no Deed of Appointment which they can find relating to the appointment or transfer of the debt within the nil rate band discretionary trust to my Grandmother, only the letter which in their view has the same effect as a deed.
Letter was submitted to HMRC.


March '15
HMRC have not accepted the letter as evidence and wish to see the Deed of Appointment to allow my Grandfather's Nil Rate Band to be transferred to the estate of my Grandmother.

SeniorSam

becrrw,

Thank you for the breakdown on this matter.

In my opinion, the solicitor has not acted correctly, or in the best interests of the Executors and beneficiaries, as he should do being as a professional solicitor.

Making errors in completing IRT400 suggests that the solicitor has very little experience, or has left matters to a junior and not checked the entries. Either is unacceptable.

The main error is the Deed of Appointment to allow your Grandfather's Nil Rate Band to be transferred to the estate of your Grandmother, which should have been excuted by the solicitor. If the solicitors felt that just a letter would be sufficient to satisfy the HMRC, instead of a formal document, then it is their resoponsibility to prove this to them. In my opinion, an error of judgement.

Not to have reported the existance of the Nil Rate Band Trust at your Grandfather's deathto HMRC is another error by the solicitors.

If you have not already done so, I believe that your course of action should be to write a formal letter of complaint, signed by the other executors and send a copy of that letter to the Solicitors Regulatory Authority. You should then receive a reply, within the time specified by the SRA when complaints are made, with details of what action the solicitors will now take.

Unfortunately this will delay the whole process even more, but from what you have said, it seems to me that the solicitors in question are not competent, but can be held fully responsible.

Once you are aware of what action the solicitors will be taking, you will know a little more, but without a formal complaint from the executors, the solicitors are more likely to continue 'faffing about' in the hope that the problem will be resolved by the executors accepting the problem.

Sam

g6jns_2

SeniorSam wrote: »

becrrw,

Thank you for the breakdown on this matter.

In my opinion, the solicitor has not acted correctly, or in the best interests of the Executors and beneficiaries, as he should do being as a professional solicitor.

Making errors in completing IRT400 suggests that the solicitor has very little experience, or has left matters to a junior and not checked the entries. Either is unacceptable.

The main error is the Deed of Appointment to allow your Grandfather's Nil Rate Band to be transferred to the estate of your Grandmother, which should have been excuted by the solicitor. If the solicitors felt that just a letter would be sufficient to satisfy the HMRC, instead of a formal document, then it is their resoponsibility to prove this to them. In my opinion, an error of judgement.

Not to have reported the existance of the Nil Rate Band Trust at your Grandfather's deathto HMRC is another error by the solicitors.

If you have not already done so, I believe that your course of action should be to write a formal letter of complaint, signed by the other executors and send a copy of that letter to the Solicitors Regulatory Authority. You should then receive a reply, within the time specified by the SRA when complaints are made, with details of what action the solicitors will now take.

Unfortunately this will delay the whole process even more, but from what you have said, it seems to me that the solicitors in question are not competent, but can be held fully responsible.

Once you are aware of what action the solicitors will be taking, you will know a little more, but without a formal complaint from the executors, the solicitors are more likely to continue 'faffing about' in the hope that the problem will be resolved by the executors accepting the problem.

Sam

With respect that might be premature. AFAIK the SRA will not act unless, and until, the solicitor's own complaints procedure has Ben exhausted. That should surely be tried first.