House to be Held on Trust

sotonhill

Hello,

I would appreciate some advice on a property trust that appears to be set up by my late mothers will. She died last month and her estate passes to my brother and I in equal shares.

However a clause in the will states that her house is to be held by the property trustees (defined as the Trustees of her will which is my brother and I) upon the following trusts

“The Property Trustees shall permit the Occupant and his Fianc!e/Wife and Children to live in the property for the Trust Period paying rent monthly in advance to my said son SON B calculated at one third of the full open market rent assessed by agreement of the parties or in default by an independent surveyor appointed by the parties subject to the Occupant” ….

The will then lists some obligations on the occupant such as keeping the property insured, paying all outgoings on the property, keeping it in good repair and that the Property Trustees shall not sell it without the Occupant's consent. (Unless he persistently and wilfully refused to meet his obligations as an Occupant or ceases to use the property as a main home.)

The will defines the Occupant as my brother and the Trust Period as the period between my mother's death and the death of the Occupant.

Although I am happy to apply for a grant of probate and complete the relevant IHT forms I am unsure of what needs to be done regarding the house to be held by the property trustees apart from agreeing a rent and the need to update Land Registry records.

I intend to seek advice from a solicitor regarding the and also instruct them to handle the property accent but I would appreciate any advice from the forum so I am not completely clueless!

Many thanks.

getmore4less

Does the brother want to be living in the place or would a gift/buy out/sale/distribution adjustment be an option.

Does he currently live there with his family?

sotonhill

I should have stated that he currently lives there with his wife and wants to continue living there.
I don't think he would be interested in a buyout.

getmore4less

In practice very similar to a live interest with the complications of rent and what happens if he dies before his family.

The tax(IHT/CGT) situation needs consideration along with the income tax.

If the brother not interested in simplification could you consider giving up the rent to simplify.

A complete review of all options needed.

Yorkshireman99

getmore4less wrote: »

In practice very similar to a live interest with the complications of rent and what happens if he dies before his family.

The tax(IHT/CGT) situation needs consideration along with the income tax.

If the brother not interested in simplification could you consider giving up the rent to simplify.

A complete review of all options needed.

The executors need professional advice as to how to safeguard the trust's interest in the property as far as insurance and access for regular inspection. What arrangements will be made for regular rent reviews? Likewise they need to be aware of their legal obligations as landlords and the IHT/CGT position. It sounds like a potential minefield and very one sided as far as paying only one third open market rent. A real can of worms.

Keep_pedalling

Why do people lumber their children with such stupidly complex arrangements? Also seems a bit unfair that he does not have to pay the full rent for the 50% share either, not surprised he would be reluctant to buy that half out.

Mojisola

sotonhill wrote: »

The will defines the Occupant as my brother and the Trust Period as the period between my mother's death and the death of the Occupant.

So it's possible that you won't ever get the benefit of your inheritance?

Did your brother have any influence over the way your mother's will was written?

dresdendave

Yorkshireman99 wrote: »

It sounds like a potential minefield and very one sided as far as paying only one third open market rent. A real can of worms.

It's possible we are not getting the whole story, perhaps whilst living with his mother, the brother may have spent a lot of his own money maintaining and improving the property, which is now being rewarded by the below market rent.


I agree with your comment about this being a potential minefield. A pity the mother didn't sit down with both her children and discuss the options rather than leaving them to sort out this mess now she has departed.

getmore4less

Third rent is probably about right as they(occupant 50% owner) are responsible for 100% of the maintenance.

The alternative could be half market rent + share of the maintenance

or potentially no share at all.

Yorkshireman99

getmore4less wrote: »

Third rent is probably about right as they(occupant 50% owner) are responsible for 100% of the maintenance.

The alternative could be half market rent + share of the maintenance

or potentially no share at all.

Half the market rent plus 50% of the maintenance would be more equitable. Insurance of the struccture should be in joint names

getmore4less

Depends where you think they would come in at.

Rental yield on property against average maintenance costs over a lifetime.

6% gross yield I would happy to take that 1% cut to have no calls for cash back to deal with the property maintenance when they want to paint a room or a new boiler.

I would be looking for no personal liabilities against a property in an interest in possession trust as a remainder man of that trust.