Wills Trust Funds IHT question

krysiatennis

My parents now both in 90s currently have mirror wills
leaving everything to one or the other and then equally to children in turn when last parent dies

However, dad has now realised this may not be the best option as mum has dementia.
It is probably not the best option since the house is solely in Dad's name.

Obviously mum no longer lacks mental capacity to make a new will
Her assets are some individual savings of £44,000 and joint savings with my dad totalling 125,000

However as Dads total assets including the house £250,000 and £4,000 worth of savings and again the joint savings of £125,000

Should he change his will to leave his assets including house to trustees in a trustfund which stipulates this trust fund should be to
look after my mother should he die first and then anything left
comes to us on her death.

Our main priority is to set things up so both are looked after should they need to go into care. My father feels that if he leaves everything to my mother it could all be called upon in means assessment for care but if he leaves in trust only her savings will be taken into account.

He obviously needs some financial/legal advice but intial thoughts would be appreciated.

Yorkshireman99

krysiatennis wrote: »

My parents now both in 90s currently have mirror wills
leaving everything to one or the other and then equally to children in turn when last parent dies

However, dad has now realised this may not be the best option as mum has dementia.
It is probably not the best option since the house is solely in Dad's name.

Obviously mum no longer lacks mental capacity to make a new will
Her assets are some individual savings of £44,000 and joint savings with my dad totalling 125,000

However as Dads total assets including the house £250,000 and £4,000 worth of savings and again the joint savings of £125,000

Should he change his will to leave his assets including house to trustees in a trustfund which stipulates this trust fund should be to
look after my mother should he die first and then anything left
comes to us on her death.

Our main priority is to set things up so both are looked after should they need to go into care. My father feels that if he leaves everything to my mother it could all be called upon in means assessment for care but if he leaves in trust only her savings will be taken into account.

He obviously needs some financial/legal advice but intial thoughts would be appreciated.

He needs to find a solicitor ŵho has a STEP qualification and get advice from him. It is not a DIY job.

Keep_pedalling

Do your parents have lasting or enduring powers of attorney in place?

securityguy

I suspect that a local authority which was feeling up for a fight could demand that a trust be liquidated. Your mother if competent, or someone with power over your mother's affairs, could use Saunders v Vautier to demand the trust's assets be paid to them, and therefore the trust is not actually inaccessible to them. I've not heard of this actually happening, and it would probably be quite a legal fight, but as the financial position of local authorities become tighter the "oh, I have a cunning scheme" schemes that circulate in places like MSE are going to come under increasing amounts of scrutiny.

If you have assets which yield an income, but which could be converted to cash by signing an appropriate piece of paper (which covers on the one hand houses you aren't living in any more, and on the other hand a trust which falls into the remit of S v V) then an LEA is entitled to either force you to liquidate them or, alternatively, assess your entitlement to benefits on the assumption you have done so. And they are also entitled to refuse to pay for care while the mess is sorted out, which may be a nuclear option.

As I, and I think YM, have repeatedly said, the imperviousness of these clever-clever financial devices to "protect" money is completely untested, and the powers of local authorities are wide-ranging. Advisors are taking money to set them up, and estates are paying various fees to manage and run them. As to their actual value as IHT and, to a greater extent as the local authority holds more cards, care fee shields, who knows? (The reason I say LAs have more cards is that HMRC want money from you, and have to win in order to get it, whereas you want money from the LA and you have to win to get it, they can just dig their heels in).

And again, I make the point that if you are requiring that the LA pay, the waiting lists and the provision can be substantially inferior to that available if you are paying. With higher-rate AA, which someone with advancing dementia will almost certainly get and which is not means tested, the costs of multiple visits per day will be substantially mitigated.

getmore4less

I suspect the real issue is they don't have POA in place and getting it now may need the court of protection to get involved..

There seems to be no intention to prevent the assets being used to give mum the best life possible.

stipulates this trust fund should be to
look after my mother should he die first

A trust with all the assets will act as a substitute for lack of POA as the current situation with mirror wills would put all the assets in the hands of someone potentially without capacity which is far from ideal.

Keep_pedalling

securityguy wrote: »

I suspect that a local authority which was feeling up for a fight could demand that a trust be liquidated. Your mother if competent, or someone with power over your mother's affairs, could use Saunders v Vautier to demand the trust's assets be paid to them, and therefore the trust is not actually inaccessible to them. I've not heard of this actually happening, and it would probably be quite a legal fight, but as the financial position of local authorities become tighter the "oh, I have a cunning scheme" schemes that circulate in places like MSE are going to come under increasing amounts of scrutiny.

If you have assets which yield an income, but which could be converted to cash by signing an appropriate piece of paper (which covers on the one hand houses you aren't living in any more, and on the other hand a trust which falls into the remit of S v V) then an LEA is entitled to either force you to liquidate them or, alternatively, assess your entitlement to benefits on the assumption you have done so. And they are also entitled to refuse to pay for care while the mess is sorted out, which may be a nuclear option.

As I, and I think YM, have repeatedly said, the imperviousness of these clever-clever financial devices to "protect" money is completely untested, and the powers of local authorities are wide-ranging. Advisors are taking money to set them up, and estates are paying various fees to manage and run them. As to their actual value as IHT and, to a greater extent as the local authority holds more cards, care fee shields, who knows? (The reason I say LAs have more cards is that HMRC want money from you, and have to win in order to get it, whereas you want money from the LA and you have to win to get it, they can just dig their heels in).

And again, I make the point that if you are requiring that the LA pay, the waiting lists and the provision can be substantially inferior to that available if you are paying. With higher-rate AA, which someone with advancing dementia will almost certainly get and which is not means tested, the costs of multiple visits per day will be substantially mitigated.

I don't think the OP was looking to dodge care fees, in fact quite the opposite, the problem seems to be with the management of the mother's funds should her husband die first. If something could be done to avoid going through the court of protection should that happen, then that would be a wise thing to do.

Too late for the mother, but now would also be a good time to sort out a LPA for the father.

Malthusian

"My father feels that if he leaves everything to my mother it could all be called upon in means assessment for care but if he leaves in trust only her savings will be taken into account" - suggests intention or at least hope of dodging care fees to me. SG has already comprehensively laid out why this may be unlikely to succeed. If you have the money to pay for your care you are expected to pay for your care, and giving it away or pretending it's not yours is unlikely to succeed.

If the issue is being able to pay the mother's care fees when Dad is gone and her own money is difficult to access due to the Court of Protection, would it not solve the problem if Dad rewrote his Will to leave his assets to his children so that they can pay for the care fees? It makes no difference to them whether they receive X in cash and pay Y in care fees until the mother's death (leaving X-Y at the end), or whether a trust receives X in cash and pays Y in care fees until the mother's death, then passes X-Y to the children. And it saves the expense, tax and complication associated with a trust.

Obviously the drawback is that the children might spend their inheritance and leave mother at the tender mercies of the state, or fall out over who has to pay or how much, but only the OP knows whether that is a risk. (If this is the reason for setting up a trust then you would obviously need to appoint trustees other than the children.)

I am guessing that the OP's parents have neglected to make PoAs or this would be a lot simpler. At the risk of stating the obvious, OP's dad should make a PoA immediately.

SevenOfNine

Yorkshireman99 wrote: »

He needs to find a solicitor ŵho has a STEP qualification and get advice from him. It is not a DIY job.

THAT is the best & only advice you should be taking on this matter. This is a public forum, anyone can, & do, voice their opinion on the topic of trusts & their 'workability'.

Actual qualifications, knowledge and/or experience on this particular topic here is unknown, therefore you must be careful not to put too much value what is said.

YM99 has given you the best advice, though solicitors who are STEP members don't come cheap & ordinarily charge by the hour, but you will get experienced professional advice as opposed to an opinion or 'best guess'.

Then you'll be in the best position to help your dad make a decision for the best way forward. It will be worth the money.

krysiatennis

Both parents have LPA they did this about 5 years ago before mum was diagnosed. Not sure how this helps. As soon as a person dies the LPA becomes void. I currentl have POA for my mother under terms of the LPA

To clear up confusion. I am not trying to deprive my parents of any of their funds towards their care. But they can be directed more beneficially Inwoukd like to know. If dad dies first once mums savings drop below the threshold for care funding we would of course like her to be entitled to this we would then be more than happy to top up using money in trust from dads house.

krysiatennis

Yes they both have LPA

getmore4less

krysiatennis wrote: »

Yes they both have LPA

To be of any use when one of them dies they need to have someone other than each other or nominate a substitute.