Property fund

Trixie1

Hi I’m hoping someone can make things a little clearer for me. Last year my dad passed away & unfortunately left an invalid will....his current wife of 2years lives in the family home where my late mother & father lived for all their married life. Through Intestacy law his current wife has inherited everything! Fast forward to the current situation we have negotiated via solicitors & she has agreed to honour my fathers wishes from his invalid will and a deed of variation has been drawn up this week but not yet signed. My dads house is worth 180k ...which was to be split 4 ways between his wife,& his 3 children.... his wife doesn’t wish to stay there & would like to downsize....so us 3 children are buying her a property for £135k by mortgaging my dads house. & her new house is being left in trust for me, my brother & sister& her daughter upon her death. However it states in the deed of variation:-
4.Life Interest
4.1.give the sum of £ 180,000 to my Trustees on the following trusts:

4.2.in this clause 'the Property Fund' shall mean the sum of £ and all property from time to time representing the same.

4.3.!My Trustees shall hold the Property Fund for my wife ('the Life Tenant') for her life and after her death shall divide it into four equal parts and hold on trust as to:
4.3.one part for my daughter absolutely;
4.3.2.one part for my son absolutely;
4.3.3.!one part for my daughter absolutely; and
4.3.4.one part for my step daughter ______________ absolutely.

My question is the house we have bought her is £135,000 so what happens to the surplus £45,000 does his wife get it or is it shared
Thank you in advance

Savvy_Sue

you have presumably taken legal advice about this: what does your solicitor say should happen?

Keep_pedalling

It sounds like it should remain in the trust, but as above take legal advice.

Trixie1

We have a solicitors appointment next week, was just wondering because had we bought her a property for £180,000 there wouldn’t be any surplus funds to worry about .

paddy's_mum

Trixie1 wrote: »

she has agreed to honour my fathers wishes from his invalid will and a deed of variation has been drawn up

Crikey! What a fair minded and honourable woman she must be.

I'm sure you and your siblings realise just how exceptionally lucky you have been in your late father's choice of (2nd) wife.

In your shoes, I might be considering putting a chunk of that 'spare' £45 in a separate account to allow for the odd holiday or the funding of maintenance of the property for the widow,

getmore4less

If she is putting £180k into the trust(the house) you are buying that but only putting back £135.


The £45k does not exist except as equity in the house you are in effect taking it as a loan.


The life tenant is entitled to the use of the funds in the trust like occupy property or use the interest.


How many kids are there?


The DOV does not seem to reflect reality yet.

There are probably some SDLT issue to address if any of the 3 kids buying the property own their own houses.

Trixie1

in that case we will only mortgage my dads house for what is required £135k, as it could have been that she chose a property at the full £180k, i will wait & get proper advice from our solicitor as there seems to be conflicting advice we do not want to mortgage my dads house for more money that is required. The draft DOV was drawn up & emailed to us last Friday hence there are no monetary values entered as up until that point there was no offer accepted on an alternative property. That didn!!!8217;t come about until Monday of this week. I was just after some clarity as to who was entitled to the surplus £45k as it states the property fund should be divided between his 3 children & his wife!!!8217;s daughter. Very confusing if she continued staying living at my dads property we wouldn!!!8217;t have this extra complication
We realise the issues around SDLT as we all have our own properties

getmore4less

Trixie1 wrote: »

in that case we will only mortgage my dads house for what is required £135k, as it could have been that she chose a property at the full £180k, i will wait & get proper advice from our solicitor as there seems to be conflicting advice we do not want to mortgage my dads house for more money that is required. The draft DOV was drawn up & emailed to us last Friday hence there are no monetary values entered as up until that point there was no offer accepted on an alternative property. That didn!!!8217;t come about until Monday of this week. I was just after some clarity as to who was entitled to the surplus £45k as it states the property fund should be divided between his 3 children & his wife's daughter. Very confusing if she continued staying living at my dads property we would't have this extra complication
We realise the issues around SDLT as we all have our own properties

That only applies when the life tenant dies until then the £180k belongs to the trust.

Is she putting the house into the trust or not?

Seems you(3 kids buying the house) need to come up with the £45k extra to put into the trust to make i up the £180k.

Have you found a lender to give you a 75% mortgage with 3 owners.

SDLT_Geek

Surely the obvious answer is for the trustees of the life interest trust to sell the £180k house and buy the cheaper house on the same trusts for the occupation of the widow. The money not used for the purchase would be held on the same trust, with the income going to the nice second wife and the children having a reversionary interest in the smaller house and money.

The should be no SDLT surcharge on the purchase that way. If any of the other children want to borrow to buy a property as an investment then they are free to do so as a separate thing.

getmore4less

SDLT_Geek wrote: »

Surely the obvious answer is for the trustees of the life interest trust to sell the £180k house and buy the cheaper house on the same trusts for the occupation of the widow. The money not used for the purchase would be held on the same trust, with the income going to the nice second wife and the children having a reversionary interest in the smaller house and money.

The should be no SDLT surcharge on the purchase that way. If any of the other children want to borrow to buy a property as an investment then they are free to do so as a separate thing.

I think the 3 kids think they can buy the house for £135k(with a mortgage), they already own houses it's them that have the SDLT complication not the trust.