Helping parents with will. Need to revise Trust. Advice please

On-the-coast

A while ago, before inheritance tax rules changed significantly, my parents had wills made up (each was a mirror of the other) putting their estate into a trust of some sort. I think the trust comes into effect at death, The basic idea being to save on inheritance tax.

Under the new rules where IHT can be shared between spouses, their exposure to IHT would be small, and would probably go away entirely when the main residence rules come into force. They have relatively little assets outside of their house.

They are going for a review with the solicitors that drew up the original wills, and have asked me to accompany them. I am an executor of the will and presume i would also be an executor / beneficiary in any new will.
Separately my father who is in his mid 80’s has asked me to consider undertaking power of attorney for him. I’m not sure if my mother wishes to do something similar.

My questions are - should we be looking for a more simple arrangement now?
Will having a trust make things more complicated than it needs to be?
What are the implications with respect to care home fees (should it come to that).
Should i trust the solicitors advice.. since i imagine that i trust is going to be more expensive to modify/maintain in the future.
Given that we do not know how a future government may behave, is that a reason for leaving things as they are?
Are there any implications with respect to power of attorney.
It’s been a long time since i saw the will / trust definition. I can ask for a copy if that would help in the Q&A.
I’m sure there are other questions i should be asking!

Hopefully this is the best place for this question. Thank you in advance for any advice / pointers.

xylophone

Your parents are tenants-in- common?

Did they have a nil rate band will in place?

https://www.fladgate.com/2016/04/keep-not-keep-wills-nil-rate-band-trusts/

https://www.taxation.co.uk/Articles/2017/04/18/336285/flexible-will-trusts-iht-planning

Above may be worth a look.

It is a good idea for your father and mother to grant PoA while both have capacity.

https://www.gov.uk/power-of-attorney

Keep_pedalling

Sounds like a nil rate band trust, and if so it should definitely go as it may have a negative impact on the transferable primary residence nil rate band. How much is the house worth?

On-the-coast

Thank you both very much.
I need to see the original document to be sure, but i think it is the Nill Rate Band you both allude to.
From the first link in the first reply:
>>Well drawn NRB Will trusts will facilitate these opportunities but also be capable of being collapsed easily, by passing everything to the surviving spouse outright perhaps, if they are not wanted or needed after the first death.<<

However i am concerned about the RNRB (is that the additional relief that i badly described in my original post, and which the second responder mentions?)

Regarding question about tenants in common... i dont know. If that is the simplest arrangement, then probably yes. If it is a big deal i can find out.

Oh... value.... hard to tell, they have been living there for 50 years. Could be anywhere between £650k & £900k. Was a very humble tied farm cottage when they moved in!

slopemaster

I think that if you're a beneficiary you won't be able to accompany your parents in case of 'undue influence". Might be worth their ringing the solicitor to check on this.

On-the-coast

I would be surprised if this was the case... i thought i just could not be a witness. I will check though.

My parents made made it clear to the solicitor that I am coming to the appointment. They asked me, not me them, and they have synchronised the appointment in several emails around my work schedule.

Keep_pedalling

The current combined nil rate bands is £900k and that will rise to £1M over the next couple of years, so IHT is not going to be a real issue. What is an issue is the fact that they are asset rich and cash poor.

In their shoes I would be looking to downsize and release some equity to make there latter years more comfortable. No point owning a a £900k house if you cant afford to maintain it.

I would also so the lack of ability to self fund care should one of them need it would worry me. We have not protected our house from care costs, but should one of us need residential care we cant use it he equity in the house to fund that while the other is still living in it, so we have ringfenced some of our savings to cover that event, nether of us want to be left in the hands of a cash strapped LA as far as care choices are concerned.

Keep_pedalling

On-the-coast wrote: »

I would be surprised if this was the case... i thought i just could not be a witness. I will check though.

My parents made made it clear to the solicitor that I am coming to the appointment. They asked me, not me them, and they have synchronised the appointment in several emails around my work schedule.

If you are an only child I dont see any problems, but if you have siblings and any of them are being treated less favourable in the will then, you being there could giver them reason to challenge it.

On-the-coast

50:50 with sister on the residue... (after they have made any gifts elswhere as they see fit). I understand the comment about downsizing. I dont think that is likely to happen in the near future at their choice, but you never know. The current location is very convenient for self & sister to visit.
Thank you.

It is sounding to me like the main reason to maintain a Nill Rate Trust would be fear of a different government changing the rules... but that government could also change the rules re trusts.

I need to get a little better estimate on the property value i think. Edit: Zoopla tells me I am in right ballpark range.

Keep_pedalling

You can only work within the current rules, and if the current trust is detrimental to the current position, I would rather die intestate than wait for a new will to be drawn up, and would revoke it without delay.

Changes in inheritance tax rules nearly always have the biggest effect more complex wills containing trusts, keeping the existing will carries much greater risks.

Mojisola

On-the-coast wrote: »

I would be surprised if this was the case... i thought i just could not be a witness. I will check though.

My parents made made it clear to the solicitor that I am coming to the appointment. They asked me, not me them, and they have synchronised the appointment in several emails around my work schedule.

Their solicitor may be okay with you being in the room for most of the discussion but ask you to leave for a short while so that he/she can talk to your parents alone to assess whether they are under any pressure.

The solicitor would have more concerns if you were being left the bulk of their assets.