setting up a trust

SeniorSam

Unfortunately, when half the property is owned by someone else (The Beneficiaries of the Trust), any gain would be assessed when the Trust is disolved. However, the three beneficiaries each have an allowance for CGT to offset against that gain, so the probability is possibly only small or not even there.

As mentioed before, if the Executors go along the IOU route with a Promissory Note for the same amount, then there would be no gain, the amount is fully protected and you keep control of the house, so not as difficult if you eventually decide to downsize later on. This is the route I have suggested my wife takes when I fall off my pearch and I have even prepared a Promissory note in readiness, as it is just as effective, but would leave her to do whatever she wishes and I know that the half value could never be attacked.

Take your time and discuss it with your family after May elections, but unless you have lots of investments, the nil rate band allowance of your husband and you will exceed the value of the estate so no inheritance tax to worry about anyway.

Sam

getmore4less

SeniorSam wrote: »

Unfortunately, when half the property is owned by someone else (The Beneficiaries of the Trust), any gain would be assessed when the Trust is disolved. However, the three beneficiaries each have an allowance for CGT to offset against that gain, so the probability is possibly only small or not even there.

The life interest gives PPR relief so NO CGT.

getmore4less

If you and your sons are the trustees and they won't mess you about I don't see the issue with letting the house appreciate in the trust rather than in your asset base.

Without a mortgage the selling and buying something else will be straight forward.

Crabapple

There is a specific form to notify HMRC of a Trust - it's a 41G.

However, you don't need to register a Trust that doesn't produce an income, so if the assets will just be half or a share of the house there will be nothing to declare. There should be some sort of note made on the title at the Land Registry - at least a transfer into names with Trustees.

I think the advice above to start with the Grant of Probate and come back to this issue later is a good one. There's no rush.

getmore4less

The land registry rep may confirm/or not that the LR cares about the trust, or are are only interested in the legal owners, trustees(including OP if trustee) and OP as themselves.

seh567

Today Ive been to see my solicitor for advice to set up a trust and talk about probate.

She has advised that because the estate is uncomplicated (no liquid assets only half share value of house) I should have no problem for doing to probate myself. Solicitor would have charged me £575+ vat for doing this.

When grant of probate has been done she has advised that I should go back to them to get a Deed of Retirement of trustee (for myself) and let my 2 sons be trustees only. The reason for this is because there could be a conflict of interest if I am trustee as well as beneficiary. Also it would allow me to stay in the marital home for life and easier administratively if indeed I wished to downsize at a later date.

I'd like some advice please because I don't understand why they are suggesting this now when we were advised that myself and 2 sons should be executor, trustees and beneficiaries when the wills were originally set up 10 years ago. The costs for all this would be £1300 which includes conveyancing fees to do the necessary work to satisfy Land Registry conditions

getmore4less

So you as a trustee/benificiary is a conflict of interest but the sons not get them to explain that.


What aspect of administration would be easier without you as a trustee?


The life interest means you can stay in the house anyway.

SeniorSam

I do not feel tht the advice you have received is accurate and dou=bt that the solicitor in question is a STEP solicitor.

Beneficiaries can act as Trustees, as in the case of your sons and that has been around for as far back as I can remember.

The Wills you and your late husband drew up allow for the \trudst to be set up on the death of either of you, so the |Trust has alrready been formed. It only requires that the executors allocate th half of the property that belonged to your husband, to the Trust, which the Will states this.

As mentioed before, it could be a simple matter to have a Pronisory note given by you to the Trustees, saying that you promise tgo pay that value to the Trust on your death and leave everything as it is at present.

seh567

Today I have received grant of probate which I did myself saving solicitors costs. I now need to find out what I need to do to make sure the Discretionary trust is set up correctly. According to your answers it would appear my solicitor has not given me good advise as they want me to give up my trustees role and make my two sons trustees rather than all 3 of us.

I cant seem to find a step solicitor in my area and I dont really want to fork out solicitors fees for a second opinion. I am sot sure if solicitors give free advice for the first 30 minutes like they used to do. I was wondering if I could get some free advise from Citizens Advice or Age Concern.

I really want to know is there any paperwork or forms I need to send to departments ie land registry and HMRC to advise them of the trust.

Many thanks

SeniorSam

If you choose to give up your trusteeship, then you have no control over what your sons may choose to do and they could argue between themselves.. If it were me, I would not do that, but retain control as a Trustee.

The Wills my wife and I have are very similar to your own, a Discretionary Trust is set up by the Will, so all the Trustees need do is allocate half the property to the Trust. In our case, I have advised my wife to retain the property but give an IOU to the Trust, which is registered against the property as a debt in favor of the Trust to safegusrd that interest. My wife and two children are to be Trustees. All they need do is notify the Land Registry that there is a legal charge against the property in favour of the Trust, but a document will be required.

You may feel more comfortable asking a solicitor to deal with this, but the fees should not be very high. Get a quote before instructing anyone,

Sam