Nil rate band discretionary trust will query

seh567

Some advice please

House is worth £300. Tenants in common. First spouse dies so surviving spouse owns 50% value of the house, remaining 50% is left in trust to two sons when surviving spouse dies. Trustees & executors are surviving spouse and two sons. at this point no monies only value in trust which I guess means nothing until the house is sold and turns into cash.

If surviving spouse then sells house for £300k and buys a flat for £180 how does it work ie does the surviving spouse have to borrow £30k from the trust and what happens to the remaining £120k (cash). Does it have to be put into some special trust bank account adminstered by the trustees and is the surviving spouse able to borrow from this pot with agreement from other trustees if times are hard?

SeniorSam

The Discretionary Trust which is created upon the death of the first to die, has clauses that alow the survivor to borrow from the Trust. Therefore if downsizing, the property can be sold, with the balance of 50% of original value owed to the Trust from the survivors estate.

Essentially, the survivor and the sons, as Trustees can agree to do almost anything within the ruiles of the Trust, but the initial 50% of propery from the first to die is protected.

Depending upon present circumstances and capital, other arrangements can even be made now to help protect capital in a Trust, but without knowing the financial details, it is impossible to offer guidance on this.

Hope this helps you.

Sam

SevenOfNine

seh567 isn't ME in disguise asking yet more questions by the way Sam!!!

SeniorSam

SevenOfNine wrote: »

seh567 isn't ME in disguise asking yet more questions by the way Sam!!!

Understood.

Sam

seh567

Don't know what you mean sevenofnine re your reply.

I can confirm that I am a proper person making an honest enquiry. My situation is that both myself and my husband made these mirror wills approx 10 years ago. My husband has now been diagnosed with a terminal illness and we are trying to get our financial affairs in order before the time comes. The only other capital we have is approx £28 which was split into separate ISAs for each but we have recently moved to interest paying joint accounts and sole bank accounts in my name so hopefully these accounts will be outside the estate as my understanding is that the joint account will pass to the surviving spouse. The value of estate will be below the nil rate band so I guess there will be no inheritance tax to pay

SeniorSam

seh567, don't worry anout sevenof nine, it was just that they had a similarly worded question to which I gave information. Your posiion is as I have mentioned above.

Sam

seh567

Thank you seniors am for your advice which has been most helpful but could you confirm if there is any special trust bank account which needs to be opened for trust capital or if it is held some other way. Thanks

SevenOfNine

Huge apologies seh567..........I had recently been asking questions regarding Nil Rate Band Discretionary Trusts, spouses, 2 sons etc.

I was ensuring the ever helpful SeniorSam would not think it was me 'in disguise' & fully help with your questions (as he did with mine).

seh567

No worries Sevenofnine. Now I understand your reply. I have since read your thread and some information you received was relevant to my situation which I also found most useful.

SevenOfNine

Thank you seh567, several people have been helpful there, particularly Sam.

Have you found the thread by pinklady called 'Executors trust bank account', might also help a bit with your questions, on my Kindle so can't create a link but it is still on the 1st page of this forum.

The other huge thread is a bit scary, regarding Trust Deed Appointment by becrrw, but did reinforce for me the importance of doing everything to do with the trust absolutely correctly.

Regards

seh567

I am not intending to sell the marital home for some time after my husband dies I just wanted to know what would happen to the monies left over if I did

In view of my circumstances I have some further questions about probate and letter of wishes

1) we have joint bank accounts totalling £28 so I guess that will be outside of the estate and will pass to me the surviving spouse so the only other asset would be the marital home worth approx £300k split 50/50 as tenants in common. Would we be advised to get a solicitor involved to do probate and set up a trust and what sort of reasonable costs should I expect to pay.

2) my husbands wishes (letter on back of will) that upon his death my two sons should inherit £5k each and my 2 grandchildren £2.5k each making a total of £15k. Given that there will be no cash only house value in the trust I am intending giving it to them from the joint bank accounts but am worried that after funeral costs and solicitors fees my savings will be depleted somewhat. Of course my boys have said they would decline at this time but I would feel bad as they have families and it would assist them greatly. Of course 10 years ago before we retired and had more monies it wouldn't have been a problem.

This is why I asked what would happen to the monies left over if I sold the house which of course I can't use to give my sons a little something because it will be in the trust fund until I pop my clogs.

Any ideas?