Confusion about status of a property partially left in trust to me

tante

When my dad died a couple of years ago, his will left half of my parents' house to me in trust - as far as I understand it, the arrangement is that my mum is really the owner of the house and can continue to live in it for as long as she wants without fearing any disruption from me, but when she dies, my dad's half will then pass to me.

My mum didn't really think about this until coming to sell her house recently, but has now been told that because half is in trust to me - and I already own my own property - that half will be considered to be 'mine' and will be liable for a much larger stamp duty bill as my 'second property', even though I have no interest in the house and technically don't even own that half yet.

We are a bit stumped by this as my mum's solicitor, who dealt with my dad's will etc, told her that she wouldn't have any problems when selling the house due to this arrangement, that it would all just proceed as normal... he must have forgotten that I would soon reach the age where I might buy a property of my own!

For some reason he apparently put me on the land registry as co-owner as well, which doesn't seem logical at all - is it normal/necessary to do this when some of a house is being held in trust? I do not consider myself to own half of this property as it is still my mum's now.

I am also a bit concerned that when I bought my first flat last year, I didn't even know about these trust arrangements and I bought my flat as my first/only property. Would me having a share of something waiting in trust make this incorrect?? It seems so absurd that half of a property I can't even live in or sell would be regarded as my 'first home' but now I'm scared that I did the wrong thing...!

ska_lover

I think your mum cannot sell without your permission - that is what is set out in my will

tante

ska_lover wrote: »

I think your mum cannot sell without your permission - that is what is set out in my will

Yes, she has my permission to sell... I would never interfere, it's still her house to sell as far as I'm concerned.

Mojisola

tante wrote: »

When my dad died a couple of years ago, his will left half of my parents' house to me in trust - as far as I understand it, the arrangement is that my mum is really the owner of the house and can continue to live in it for as long as she wants without fearing any disruption from me, but when she dies, my dad's half will then pass to me.

If the will was well-written, it will have covered this possibility.

It's usual for the surviving spouse to be able to sell the house. If there is cash left over, that may be handed over as part of your inheritance or your mother may be able to keep it but only use any income generated from it while maintaining the capital for you.

Skibunny40

The extra stamp duty on a second property only came into law recently, so wouldn't have been something the solicitor could have foreseen when the wills were being written.

xylophone

Was this a Life Interest Trust?

https://www.redstonewills.com/news/item/what-is-a-life-interest-trust-and-how-can-it-help-you

What exactly does your father's will say?

https://www.gov.uk/government/publications/private-trusts-of-land

https://www.gov.uk/government/publications/notices-restrictions-and-the-protection-of-third-party-interests-in-the-register

https://forums.moneysavingexpert.com/discussion/4983395

even though I have no interest in the house and technically don't even own that half yet.

But it would seem that you do?

For some reason he apparently put me on the land registry as co-owner as well,

Are you and your mother shown on the register as "joint proprietors/tenants-in-common" with Form A restriction?

Have you consulted the solicitor who originally drafted the will?

G_M

tante wrote: »

When my dad died a couple of years ago, his will left half of my parents' house to me in trust -......


My mum ....has now been told that because half is in trust to me - and I already own my own property - that half will be considered to be 'mine' and will be liable for a much larger stamp duty bill as my 'second property', !

Who told you this?

Stamp duty is not payable on a sale, only on a purchase. So you and mum can sell without any stamp duty liability.

Now, if you and mum jointly buy another property, then yes, the additional stamp duty will be payable - is that the plan?

How long ago did your dad die? I believe a Deed of Variation to a will can be executed up to 3 years from the date of death. If so, you could explore the possibility of varying dad's will so that the trust need not inherit on your behalf.

For example, you (as Beneficiary of the will) could vary the will such that your inheritance goes to mum. She then owns the house 100% ad can sell, and buy or whatever.

Are there Inheritance implications on dad's will or was his Estate below the IHT limit?

You should also consider whether giving it to mum would increase her estate to above the IHT limit, which would obviously not be desirable.

Are there any siblings or are you sole Beneficiary of dad's will, and likely to be sole Beneficiary of mum's will? (ie the property will come to you in full eventually one way or another)?

getmore4less

You don't have any say on the sale the trustees are responsible for that.

There is no extra SDLT on another purchase as you don't have a beneficial interest in the property while it is in the trust. The beneficial interest lies with the life tenant.

DOV need to be done in 2 years of death.

G_M

getmore4less wrote: »

DOV need to be done in 2 years of death.

I stand corrected. Thanks.

grad101

Sorry to jump on to this post, but this has been something I've been wondering for a while now.

Re the extra stamp duty - if someone is left part of a property in trust, and they later then go on to purchase their own home (which what would otherwise be their first home), are they legally considered to 'own' the property in trust, such that they would encounter a higher stamp duty upon purchasing their own home, which would inadvertently become their 'second' home?

From what has been explained to me - the trustees of the property in trust don't technically 'own' the capital unless they want to sell the house. So it would not be considered as already owning a property? Would someone be able to clarify?

G_M

grad101 wrote: »

Sorry to jump on to this post, but this has been something I've been wondering for a while now.

Re the extra stamp duty - if someone is left part of a property in trust, and they later then go on to purchase their own home (which what would otherwise be their first home), are they legally considered to 'own' the property in trust, such that they would encounter a higher stamp duty upon purchasing their own home, which would inadvertently become their 'second' home?

From what has been explained to me - the trustees of the property in trust don't technically 'own' the capital unless they want to sell the house. So it would not be considered as already owning a property? Would someone be able to clarify?

See post 8 above.