Leaving Property in a will trust

AshfordPMC

I'm currently sorting my will out and have a specific wish that I leave my properties (2) to my two daughters.

This sounds straightforward enough, but I want to stipulate that upon my death the properties are left to them both jointly, (So they both are joint owners of each property) and are not to be sold but kept to provide an income for them both. Neither of the properties are my main residence, by the way.

My question is, should I just put this as a wish in the will or put the properties into a will trust with my Daughters as beneficiaries upon death?

The other factor is IHT, as they are not my main residence they will not fall into the extra relief that has recently been introduced, so £325k will be my nil rate band.

For info, the current value of the properties are c£540k, other assets in the region of c£468k. I would love to be able to gift them (the properties) now but they are generating me my income at the moment, (neither are mortgaged).

To put the cat amongst the pigeons maybe setting up a Ltd Company with the properties would be a better option?

Am I thinking too hard about this?

Owain_Moneysaver

What if your daughters don't want an income, but want the capital in a lump sum? Or to live in themselves?

What happens if the properties (which presumably are tenanted) fail to achieve a rental income greater than the maintenance and management costs?

Using a Ltd Co to own and manage the portfolio is certainly an option, but it would be impossible to prevent your daughters selling either the properties or their shares to realise cash. And the value of the Ltd Co shares wl be taken into account for IHT, and for your daughters' entitlement to benefits etc.

If you put the properties into trust for your daughters you will have to appoint trustees, and they will be able to sell the properties and wind up the trust if they think that is in the interest of the beneficiaries. Professional trustees will charge fees.

You also need to take professional advice re IHT.

Keep_pedalling

Simply split you estate equally without any conditions or wishes, it is silly to force people into being landlords from beyond the grave, there are plenty of other options for investing an inheritance. If they both want to retain the properties that is fine, but dont make life difficult for them.

One of the big problems with holding your most of your assets in properties is that unlike equities you cant dispose of them piecemeal to make use of your annual CG allowance so if you need to sell them (for care costs perhaps) you get hit with a big CGT bill. Its not just selling either, if you transfer them to your children or to a Ltd company you hit the same CG issue.

Presumably you rent your home, which is nuts as far as IHT is concerned. Moving into one of them would cut your estates IHT burden considerably.

Perhaps some paid advice with an IFA might be wise.

AshfordPMC

Keep_pedalling wrote: »

Simply split you estate equally without any conditions or wishes, it is silly to force people into being landlords from beyond the grave, there are plenty of other options for investing an inheritance. If they both want to retain the properties that is fine, but dont make life difficult for them.

That, is s very good point!

Mojisola

AshfordPMC wrote: »

This sounds straightforward enough, but I want to stipulate that upon my death the properties are left to them both jointly, (So they both are joint owners of each property) and are not to be sold but kept to provide an income for them both.

As others have said, it's a terrible idea!

Don't try to run their lives from beyond the grave. If you leave your estate between them, they can decide whether to keep the properties in shared ownership, have one each, sell one and keep the other as a rental or sell both, depending on what suits them best.

Don't name specific properties in your will in case one or both get sold before you die.

AshfordPMC

Keep_pedalling wrote: »

Presumably you rent your home, which is nuts as far as IHT is concerned. Moving into one of them would cut your estates IHT burden considerably.

This is very true and maybe one day I may live in one of the properties which, as you say will considerably help with IHT mitigation. However, I'm currently living in a VW Bus in Costa Rica! :dance:

Keep_pedalling

AshfordPMC wrote: »

This is very true and maybe one day I may live in one of the properties which, as you say will considerably help with IHT mitigation. However, I'm currently living in a VW Bus in Costa Rica! :dance:

That is so cool. I have CR on my bucket list, and will tick it off in November with a wildlife photography trip of a lifetime.

AnotherJoe

Agreed, shocking idea for all the "controlling beyond the grave" features.

It can also backfire, speaking to a friend today (subject came up as my mum just died so wills were being discussed) his father left his house to person A and what woudl have been much smaller residue of the estate to Person B.

However, some time before he died, he went into a care home, so the house was sold to provide funds for this. The will was never updated by then he was gaga. End result, person A got the house - eg nothing since there wasn't one, person B got everything left, eg the "residue". After some acrimony Person B who was originally insisting that she got it all, did relent and give half to A, but it caused a lot of ill will.

In your case, suppose one sister want to sell after a year or two and another doesn't. Now they are into challenging the (IMHO unreasonable) will , one is saying she is against fathers wishes, and a lot of acrimony and expense.

Do Not Do This.

Sea_Shell

Mojisola wrote: »

As others have said, it's a terrible idea!

Don't try to run their lives from beyond the grave. If you leave your estate between them, they can decide whether to keep the properties in shared ownership, have one each, sell one and keep the other as a rental or sell both, depending on what suits them best.

Don't name specific properties in your will in case one or both get sold before you die.

I agree with this!! Don't over complicate things.