Probate & Trust Advise

recruit18

My father recently passed away leaving my mother as a widow. Myself and my brother are both executors of the will.
My Dad's will states that all his assets including 50% of the house they own together (mortgage free) and all his money/shares etc.. should go into a Trust with my brother and myself named as trustees. House value est £300k+, savings/investments est £130k ish.
The will also states that my mother should be able to live in the house as long as she lives and that she would be the sole beneficiary of any income/interest from the trust investments, but not have access to the capital. My brother and myself will then inherit the capital on my Mums passing (hopefully not for a long time!). This was done to protect Mum from poor decisions or negative influences as my Dad trusted myself and my brother to look after Mums long term needs.

We have started the probate process and engaged with a solicitor for that part.

Any advise on how to set up this trust,what financial institutions to use, costs involved, pitfalls to watch out for, work involved to maintain would be greatly appreciated?

Also my Mum has little savings and drives my Dad's car. We are thinking of doing a one off transfer of assets/funds from the trust to my Mum for the car and an amount of money for her to do needed maintenance/redecoration on the house and provide her with a lump sum savings pot. We will then manage the remaining investments as best we can to top up her pension income. Solicitor said this would cost £200+vat to do.

Thanks in advance

Yorkshireman99

recruit18 wrote: »

My father recently passed away leaving my mother as a widow. Myself and my brother are both executors of the will.
My Dad's will states that all his assets including 50% of the house they own together (mortgage free) and all his money/shares etc.. should go into a Trust with my brother and myself named as trustees. House value est £300k+, savings/investments est £130k ish.
The will also states that my mother should be able to live in the house as long as she lives and that she would be the sole beneficiary of any income/interest from the trust investments, but not have access to the capital. My brother and myself will then inherit the capital on my Mums passing (hopefully not for a long time!). This was done to protect Mum from poor decisions or negative influences as my Dad trusted myself and my brother to look after Mums long term needs.

We have started the probate process and engaged with a solicitor for that part.

Any advise on how to set up this trust,what financial institutions to use, costs involved, pitfalls to watch out for, work involved to maintain would be greatly appreciated?

Also my Mum has little savings and drives my Dad's car. We are thinking of doing a one off transfer of assets/funds from the trust to my Mum for the car and an amount of money for her to do needed maintenance/redecoration on the house and provide her with a lump sum savings pot. We will then manage the remaining investments as best we can to top up her pension income. Solicitor said this would cost £200+vat to do.

Thanks in advance

Is your solicitor a STEP member? If not that is who you need advice from on how to set up and administer the trust. Exactly what can be done with the trust will depend on the exact wording of the will.

recruit18

Ok thanks I will find out. I haven't signed the forms for the solicitor to administer probate yet, we've just had an initial meeting.

The solicitor is the local one my Dad always used and where he kept a copy of the house deeds and will etc...

If the solicitor isn't STEP registered should I use a STEP registered solicitor for both the probate and advising of how to set up the trust?

Yorkshireman99

recruit18 wrote: »

Ok thanks I will find out. I haven't signed the forms for the solicitor to administer probate yet, we've just had an initial meeting.

The solicitor is the local one my Dad always used and where he kept a copy of the house deeds and will etc...

If the solicitor isn't STEP registered should I use a STEP registered solicitor for both the probate and advising of how to set up the trust?

Probably best to use the STEP one. To me, as a layman, the will may not have been drawn up well!

Margot123

I agree with Yorkshireman here.

A STEP solicitor is a must. Many wills are written in such a way that they take a lot of interpreting. This is a deliberate act by the will-writer so that their services are called on when needed to interpret the wording. This is where they make their real money.

Why pay the solicitor who has made your life difficult, when they could have written everything in simpler terms?

Crabapple

You don't need to 'set up' this trust, it already exists. What you need to do is administer the estate so that the assets can be transferred to the trustees.

As far as the investment is concerned you need a good independent financial advisor.

I disagree that you absolutely need a STEP qualified person. You need someone who specialises in probate not an old-fashioned 'dabbler' who does a bit of everything. Many experienced practioners do not have STEP because it is an expensive and time consuming qualification to achieve.

On the information given this is a pretty straightforward life interest trust.

getmore4less

Basic life interest trust fairly standard and straightforward.

I would step back and understand how mum is going to support herself and maintain the house.

120k won't create much income and the capital is locked.
What will she be living off?

A trust with income has more management overhead.
A trust with just a life interest property has little/no management.

eddyinfreehold

One thing to bear in mind as the years progress is that as your Dad didn't leave his entire Estate to your Mum but to a Trust. Assuming they were married then it is worth keeping an eye on Inheritance Tax thresholds. I believe that your Father's IHT nil rate band threshold can no longer be transferred and added to your mother's. It is therefore important to make an annual check on this, comparing the trust's total value against the current single person's IHT nil rate band. Worth checking the point with a solicitor.

getmore4less

eddyinfreehold wrote: »

One thing to bear in mind as the years progress is that as your Dad didn't leave his entire Estate to your Mum but to a Trust. Assuming they were married then it is worth keeping an eye on Inheritance Tax thresholds. I believe that your Father's IHT nil rate band threshold can no longer be transferred and added to your mother's. It is therefore important to make an annual check on this, comparing the trust's total value against the current single person's IHT nil rate band. Worth checking the point with a solicitor.

Read up the rules on immediate post death life interest trusts and amend you post.

recruit18

Thanks for the advise.

Mum will have her own pensions and a share of Dads pensions. I estimate £1,400/month so that seems reasonable for 1 person. Any interest from the trust will be an additional bonus. As I said we're planning to release £20k-£30k for home maintenance and savings for Mum.

So it seems theres a difference of opinion on STEP or not. The will seems clear-ish what should happen. So when we have probate we just ask the banks and share companies to transfer the assets to an account(s) in the name of the trustees and then we manage the investments from there (using an independent financial adviser if required), paying any interest to Mum bank account?

Any idea of costs of using an IFA?

mrschaucer

getmore4less wrote: »

Read up the rules on immediate post death life interest trusts and amend you post.

For what it's worth, a quick google on gov.uk shows the difference between will trusts:

3. When a trust is set up by a will

If a home is put into an interest in possession trust at the time someone dies, the additional threshold will available for their estate if the person who benefits from the trust is their direct descendant.

If the beneficiary isn!!!8217;t a direct descendant, the estate won!!!8217;t qualify for the additional threshold. In that case the unused additional threshold would be available to transfer to a surviving spouse or civil partner!!!8217;s estate.

and

If a home is put into a discretionary trust on death, the deceased!!!8217;s estate won!!!8217;t qualify for the additional threshold even if the beneficiaries are direct descendants of the deceased. Whether the beneficiaries are entitled to use the home is at the discretion of the trustees, so the home won!!!8217;t form part of any beneficiary!!!8217;s estate and they!!!8217;ll not be treated as inheriting the home.

The estate may still qualify for the additional threshold if the trust meets certain conditions. For example, if the trust has been set up for:

a disabled beneficiary
orphaned children under 18
any children under 25

Might save others looking it all up.

Edit to add: What on earth is going on with apostrophes?!