Probate: Residue Income / Life interest on savings

getmore4less

The other issue with the trust is the extra tax returns the trustees need to do.

Houses in life interest trusts are easy when there is no income.

Thinking about it the DOV may be the way to go simplifies everything and the trust never exists.

Should not change the IHT position so mum can keep/gift as much as she wants

HMRC have good guide on doing DOV, and the bit of paper will only be needed if HMRC question mums estate.

Keep_pedalling

You say she is near to the IHT limit, which with both lots of transferable nil rate bands currently means £850k, but over the next couple of years that will increase to £1M with the increase in primary residence NRB, so IHT will probably never be an issue with her estate.

If she has no need for the £55k then the simplest thing for her to do would be to simply give it to her children once probate has been completed. No need for a DOV, the husbands transferable nil rate bands remain intact and should she survive for 7 years the £55k falls out of her estate reducing the chance of Her estate ever paying IHT.

For your benefit make sure her children are named as executors in her will not you.

gwernybwch

From what I can remember they did some basic 'worst case scenerios' calculations and worked out that it was likely that she would get close her IHT limit, that is why they decided that once probate had been completed, they would let the dust settle and then seek professional advice on the different scenerios, including potential deed of variations, gifts and so on. But that is for them to decide in the future.

Right now, I need some advice on those with a life interest on the savings!

After doing a bit of research, it seems that what we need is either a (will) trust account / trustee account or a joint account for the trustees or an investment account for Trustees (if these aren't one and the same thing?).

Yorkshireman99

gwernybwch wrote: »

From what I can remember they did some basic 'worst case scenerios' calculations and worked out that it was likely that she would get close her IHT limit, that is why they decided that once probate had been completed, they would let the dust settle and then seek professional advice on the different scenerios, including potential deed of variations, gifts and so on. But that is for them to decide in the future.

Right now, I need some advice on those with a life interest on the savings!

After doing a bit of research, it seems that what we need is either a (will) trust account / trustee account or a joint account for the trustees or an investment account for Trustees (if these aren't one and the same thing?).

Don’t rely on what you find on the net. As I said before ask around for an IFA personally recommended.

Keep_pedalling

gwernybwch wrote: »

From what I can remember they did some basic 'worst case scenerios' calculations and worked out that it was likely that she would get close her IHT limit, that is why they decided that once probate had been completed, they would let the dust settle and then seek professional advice on the different scenerios, including potential deed of variations, gifts and so on. But that is for them to decide in the future.

Right now, I need some advice on those with a life interest on the savings!

After doing a bit of research, it seems that what we need is either a (will) trust account / trustee account or a joint account for the trustees or an investment account for Trustees (if these aren't one and the same thing?).

You have 3 basic choices, hold in cash with simple interest, hold in equities, or to carry out a DoV to get rid of the trust altogether.

There are only a few places to hold cash for a trust, NS&I is one I believe, so the interest that can be generation is going to be limited to a few hundred a year. If the widow lives for many years the capital is going to be greatly reduced by inflation.

Equities are risky especially in the short term and the cost to manage such a small amount will probably not be worthwhile.

As none of the beneficiaries seem to to happy with the set up the simplest option would seem to be a DoV transferring the £55k to the children or the widow.

gwernybwch

Keep_pedalling wrote: »

You have 3 basic choices, hold in cash with simple interest, hold in equities, or to carry out a DoV to get rid of the trust altogether.

There are only a few places to hold cash for a trust, NS&I is one I believe, so the interest that can be generation is going to be limited to a few hundred a year. If the widow lives for many years the capital is going to be greatly reduced by inflation.

Equities are risky especially in the short term and the cost to manage such a small amount will probably not be worthwhile.

As none of the beneficiaries seem to to happy with the set up the simplest option would seem to be a DoV transferring the £55k to the children or the widow.

Thanks for the reply.
A DoV right now isn't what they want; they want to have a bit of time to think things over before making any big decisions and most definitely don't want to engage the same Solicitor in yet more legal work.

I think that the beneficiaries are more that happy - for the time being at least - to go with the simple option; having some kind of cash trust.
Although I think that we need to do a bit more research of what these products are before engaging an IFA. We are a bit weary of engaging a professional who "doesn't know what we don't know".

getmore4less

if they want time to think, don't bother doing anything just leave it in the estate account, if in 4-6 months they are still dithering then review investing.

Check if you can hand it over for them(mum and kids) to be the trustees.

Stops it being your problem

gwernybwch

getmore4less wrote: »

if they want time to think, don't bother doing anything just leave it in the estate account, if in 4-6 months they are still dithering then review investing.

Check if you can hand it over for them(mum and kids) to be the trustees.

Stops it being your problem

From what the Solicitor is telling us, just leaving it for the time being isn't an option. "Distribution of funds" needs to take place before probate can be finished / certificate of discharge can be issued.
Looking back through my records it seems that she has cashed the savings and they are sitting in the Solicitors bank account. She didn't set up an executors bank account as we didn't tell her to set one up (hence the mention of "don't know what we don't know" further up the thread).

I suppose that there is the possibility that I can withdraw as an executor, but we are close to the finishing line now I know that it would mean throwing the Solicitor into a tize again and cue more letters at £237 per hour. I agreed to be the Old Boys executor and I'm not going back on my word now.

Of course, once the certificate of discharge is issued it is no longer my problem and it is up to the family how they want to manage the situation going forward.

Yorkshireman99

Far too late for you to resign as executor.

Keep_pedalling

Yorkshireman99 wrote: »

Far too late for you to resign as executor.

It is, but you don’t have to be a trustee for this money, hand that responsibility over to the two children.