Creating a Trust for our house

kidmugsy

Mojisola wrote: »

One way to protect half of the value of the property is for you and your OH to own the house as 'tenants in common', usually 50% each.

Both of you need wills, leaving your half of the house to the children but giving the surviving partner the right to live in the house and also the right to sell up and move if wanted. You also need to specify who has the pay for maintenance, etc.

The children don't actually get their hands on any money until the second death or until the house is sold to pay for residential care.

Subject to suitable legal advice it might even be wise to leave the half-house to a suitable trust rather than directly to the children. Perhaps you want to talk to a solicitor who is a member of STEP.
http://www.step.org

Mojisola

kidmugsy wrote: »

Subject to suitable legal advice it might even be wise to leave the half-house to a suitable trust rather than directly to the children.

What would be the benefit of a trust over the children inheriting with the surviving parent having a life interest?

kidmugsy

Mojisola wrote: »

What would be the benefit of a trust over the children inheriting with the surviving parent having a life interest?

The children's spouses would have more trouble getting at the asset in the event of divorce. The house would be protected from the children's creditors in the event of bankruptcy. The house wouldn't be in the children's estates and therefore exposed to IHT if one of them dies young, nor could a child's share be directed God-knows-where by a child's will.

downshifter98

My parents went down this road (tenants in common) some years ago. My Mum sadly passed away 2 years ago so her half of their house is now in trust with my brother and I as trustees - Dad still lives there (and pays for upkeep) and the beneficiaries of Mums will (sons and Grandchildren) have no access to their inheritance (ie Mums half of house) until Dad no longer needs it. It's a win win because it also means (as we have a future interest) that Dad doesn't feel that the responsibilities of owning a home is all on his shoulders (we had a small issue with building work next door and it helped when the builders realised that Dad's house didn't just belong to an older person - harsh but true). Definitely worth considering but perhaps not based on a cold call.

cushty

jamesd wrote: »

There are typically better solutions than the one you've been considering. How about telling us more about all of your assets and potential income in retirement so we can give you some idea of just what is doable without that sort of thing?

You know, your kids would probably have the same view if it came to that, though do remember that it's only likely to happen to around a quarter of people.

Our only asset is our bungalow. My husband and I are retired - he has a fairly good pension, but I don't, so I have his life insured otherwise I would be in deep dodo if he were to die. We are basically enjoying a great retirement spending most of our income on travel (our son lives in Australia). So we really only have our bungalow (worth around £170K) to leave to our children and grandchildren.

We spoke to our kids and they were horrified that we were considering such a move. So glad I mistrusted the sales pitch and posted on here.

cushty

Mojisola wrote: »

One way to protect half of the value of the property is for you and your OH to own the house as 'tenants in common', usually 50% each.

Both of you need wills, leaving your half of the house to the children but giving the surviving partner the right to live in the house and also the right to sell up and move if wanted. You also need to specify who has the pay for maintenance, etc.

The children don't actually get their hands on any money until the second death or until the house is sold to pay for residential care.

Thank you once again Mojisola - having read all the comments and advice I think this must be the best route to take for all our sakes and we will be visiting our solicitor on Tuesday.

Just as a point of interest - we have just received a quote (we wouldn't sign anything at the time) for setting up the Trust - wait for it ...... drum roll....... £2K An email has been sent informing them that we won't be proceeding.

Kesi

Sorry to but in on this thread but We have also gone down this route but one of our children has just become separated from her husband and we are now having to rethink our wills. Kidsmugsy's suggestion is interesting but what would a 'suitable trust' be and approximately how much would this cost to set up?.

xylophone

Our only asset is our bungalow. My husband and I are retired - he has a fairly good pension, but I don't,

No spouse provision?

Thank you once again Mojisola - having read all the comments and advice I think this must be the best route to take for all our sakes and we will be visiting our solicitor on Tuesday.

You saw the link in post 13?

xylophone

Sorry to but in on this thread but We have also gone down this route but one of our children has just become separated from her husband and we are now having to rethink our wills. Kidsmugsy's suggestion is interesting but what would a 'suitable trust' be and approximately how much would this cost to set up?.

You own the property as tenants-in-common and each of you (in your current wills) has left the share to the children with a life interest to the spouse?

You would change the will to leave the share to a discretionary trust where the Trustees would have discretion as to how to apply trust assets and income.

However, you need to appoint trustees able and willing to administer the Trust and to deal with taxation etc.

See https://www.gov.uk/trusts-taxes/types-of-trust

http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/personal-tax/uk-trusts-and-estates/lectures/1d03.pdf

See a solicitor with expertise in wills and trusts

http://www.step.org/member-directory

cushty

xylophone wrote: »

No spouse provision?

We leave everything to each other first, then to the kids, then to grandkids - that's the simple version not using the legalese in our wills and we have life insurance so think we have spouse provision covered.

You saw the link in post 13?

Yes thank you, I saw the link and have now read it xylophone.