Leaving House to Children

TheDirector

Hi me and my partner want to make a will that leaves everything to our two children i.e. any money in bank and from pensions, and also the house itself. We have been told that the executor would give this all to the trustees (which we would have to name in our will) to look after until the children are 18, but what in reality normally happens with the house? Could for example we ask that the property not be sold until the children are 21 or 25? And if so, would the trustees be able to let a named guardian move into the house or could the trustees rent it out? Would the trustees use any of the inheritance money to maintain the property? Whose name would the deeds be in once mortgage has been paid off?

Just sort of wondering how in reality this actually tends to work and can work?

Also in terms of setting up a trust, what does this actually mean? For example, if we say in our will that we want certain people to act as trustees for all the money and the property that we want to go to our children, does that in itself constitute putting something in trust? And therefore, would the next step be the executor setting up two bank accounts for the children and putting them in the names of the trustees?

Lastly, in this context, what happens with the property for it to be in 'trust' if it is not sold? Is the land registry / deeds put into the trustees names once executor 'hopefully' pays off the mortgage with the life assurance?

I know there are a lot of questions there, but I am struggling to find out these practical details / realities in order to fully understand how it will work. Any help greatly appreciated!

Yorkshireman99

TheDirector wrote: »

Hi me and my partner want to make a will that leaves everything to our two children i.e. any money in bank and from pensions, and also the house itself. We have been told that the executor would give this all to the trustees (which we would have to name in our will) to look after until the children are 18, but what in reality normally happens with the house? Could for example we ask that the property not be sold until the children are 21 or 25? And if so, would the trustees be able to let a named guardian move into the house or could the trustees rent it out? Would the trustees use any of the inheritance money to maintain the property? Whose name would the deeds be in once mortgage has been paid off?

Just sort of wondering how in reality this actually tends to work and can work?

Also in terms of setting up a trust, what does this actually mean? For example, if we say in our will that we want certain people to act as trustees for all the money and the property that we want to go to our children, does that in itself constitute putting something in trust? And therefore, would the next step be the executor setting up two bank accounts for the children and putting them in the names of the trustees?

Lastly, in this context, what happens with the property for it to be in 'trust' if it is not sold? Is the land registry / deeds put into the trustees names once executor 'hopefully' pays off the mortgage with the life assurance?

I know there are a lot of questions there, but I am struggling to find out these practical details / realities in order to fully understand how it will work. Any help greatly appreciated!

Ideally you need to consult a solicitor who is a trust specialist who is a STEP member. They will be able to tell you the various ways to this. Remember that even if you specify 21 the trust can be broken at 18.

Land_Registry

TheDirector wrote: »

Hi me and my partner want to make a will that leaves everything to our two children i.e. any money in bank and from pensions, and also the house itself.

Lastly, in this context, what happens with the property for it to be in 'trust' if it is not sold? Is the land registry / deeds put into the trustees names once executor 'hopefully' pays off the mortgage with the life assurance?

I know there are a lot of questions there, but I am struggling to find out these practical details / realities in order to fully understand how it will work. Any help greatly appreciated!

The trust will deal with your beneficial ownerships rather than the legal ownership which we register.

If you and your partner are joint legal owners then you may choose to register a restriction to indicate that a trust exists. See our PG 24

If one of you dies then the legal ownership passes to the surviving joint owner. The trust and restriction remain in play

When the surviving joint owner dies the legal ownership passes to their estate, namely their executor obtains probate and deals with the property as appropriate to the trust/wills/beneficial ownerships

Some may simply leave the register as was until the legal ownership can it needs to be transferred. Some may seek to register themselves as the personal representative. But the trust and restriction still remain in play.

So your other Qs come first and are the most important to answer. The property and legal ownership tend to be easier to deal with depending on what's required. Yorkshireman's advice to get professional help is spot on

Tom99

TheDirector wrote: »

Hi me and my partner want to make a will that leaves everything to our two children

Only when you both die? Or does 50% pass to children on 1st death?

getmore4less

This is one to take take to a solicitor no harm in doing some ground work to give some time to thinking about how you go about it and structure your options.

Trustees and guardians need to be people you trust will do what's best for your kids.

It is not uncommon to have a guardian as a trustee along with someone else to oversee.

What many have difficulty is how much discretion to give the trustees over the assets.

The more restrictions you put in the greater the risk you miss something or stop the trustees taking actions on something that could be important.

classic example could be you specify the house can't be sold till they are 25 and one of the kids needs expensive medical care.

Another areas of issue is at what level do you compensate a guardian if you want the bulk of the assets to remain with the kids, do you want to force them to live in your old house because they can't afford to look after the kids any other way.

eg. you have your sister as guardian but they need a bigger house to hold their kids and yours. yours is big enough do you force them to sell up and life in that.

if you structure things so they can sell and get a bigger house, do they have to sell and downsize once your kids have left home.

...

TheDirector

Land_Registry wrote: »

The trust will deal with your beneficial ownerships rather than the legal ownership which we register.

If you and your partner are joint legal owners then you may choose to register a restriction to indicate that a trust exists. See our PG 24

If one of you dies then the legal ownership passes to the surviving joint owner. The trust and restriction remain in play

When the surviving joint owner dies the legal ownership passes to their estate, namely their executor obtains probate and deals with the property as appropriate to the trust/wills/beneficial ownerships

Some may simply leave the register as was until the legal ownership can it needs to be transferred. Some may seek to register themselves as the personal representative. But the trust and restriction still remain in play.

So your other Qs come first and are the most important to answer. The property and legal ownership tend to be easier to deal with depending on what's required. Yorkshireman's advice to get professional help is spot on

Thanks for your response. So from what you are saying, the executor / named trustees are not obliged to put their names on the property, they can simply leave the house registered to the two dead people, until the children reach 18?

You say that we could register a restriction to indicate that a trust exists. To be clear, when you say a 'trust exists' you simply mean that we have expressed within out will for the property to be held in trust by certain people until the children can inherit? Our understanding is we do not need to do anything else in addition to the will for this to happen.

Is this restriction simply to note that this property will one day be held in trust by people for some beneficiaries? What is it restricting? And is it absolutely necessary? I went to the link you provided and started to read through it and I could not make sense of it, and it did not seem to refer to this situation we are talking about.... Is there a section in the document that deals with this?

@Tom99, we are joint owners, so when one of us dies, the other person becomes sole owner. When we both die we want the property to go to our daughters when they are say 25.

@getmoreforless, you raise some good points, we have thought about this and are going to choose someone as guardian who has their own house, but who would be more than willing to move into ours to look after the children, and they would just keep theirs (or rent it out). We are also going to choose some other people as reserves who we know would do the same. All of these have no dependancies under 18 either.

There are some other people in the family who we would be happy with but they have a council house and actually we would not want them to give up their property to move into ours, because further down the line when the children want the house to themselves or want to sell it, then they could be homeless. So we would not name them, so as to protect them. We personally would not want an arrangement where the money can be used for a bigger house, because of the complexities that will bring later and the possible vulnerability to the guardians.

We will probably leave a letter saying that regardless of who we name we want the family to also consider the children's wishes at the time, and if there is a better arrangement that can be achieved while keeping the property from being sold and not putting others peoples homes at risk, then they can explore them options.

So our basic understanding is that we will name guardians, express our wishes and how we want people to approach it, but that this is not legally binding. It would seem that even asking for the property not to be sold until the children are a certain age may not be legally binding (not sure about this and whether executor or trustees can go against this). Our wish though would be that the property not be sold until they are of age to inherit it.

Land_Registry

TheDirector wrote: »

Thanks for your response. So from what you are saying, the executor / named trustees are not obliged to put their names on the property, they can simply leave the house registered to the two dead people, until the children reach 18?

You say that we could register a restriction to indicate that a trust exists. To be clear, when you say a 'trust exists' you simply mean that we have expressed within out will for the property to be held in trust by certain people until the children can inherit? Our understanding is we do not need to do anything else in addition to the will for this to happen.

Is this restriction simply to note that this property will one day be held in trust by people for some beneficiaries? What is it restricting? And is it absolutely necessary? I went to the link you provided and started to read through it and I could not make sense of it, and it did not seem to refer to this situation we are talking about.... Is there a section in the document that deals with this?

They are not obliged to update the register re the joint owners' deaths. The death are factual so in some cases any update does not occur until it needs to happen, namely they need to prove that they are the legal owner.

For example historically a property might be registered in the sole name of the Husband. He dies and it 'passes' to his widow and she remains in the house. If she simply lives there then there's no obligation to update the register.

A trust affects the beneficial interests of the joint owners. We don't register the specific details of the trust. If you apply for a restriction on the title to for example protect it and indicate to others that one exists then that is what the restriction does. If no restriction is registered then a trust can still exist and be legally binding, hence my explanation re TIC or JTs being added.

Wills will also affect the beneficial ownerships and if those are split in some way then a restriction can be registered to protect those interests but again it does not have to be.

The form A restriction restricts the surviving joint owner - the wording makes that clear. The linked guidance deals with private trusts per se and how they may impact on the legal title we register. It is not intended to cover your scenario specifically but merely to highlight the distinctions between trusts and legal/beneficial ownerships

The key to remember here is that your 'wishes' relate to the beneficial ownership as described. Hence you can have wills, deeds of trust etc to set those wishes out. We don;t register 'wishes'. We register land/property and it's legal ownership

And the easiest way I find to describe that, and which may in some small way help to understand why our guidance will not cover the majority of your Qs, is that:-

the legal ownership is of the property, namely the land and building(s). that can't be split as in you have half the land, bricks & mortar and you have the other half when you are both 19; whilst

the beneficial ownership is the £s and ps, namely the value of the property. Now that can be split as in you can have half the value each as and when you are 18.

TheDirector

Thanks for your reply - but I am not sure what you mean by a few things:

Land_Registry wrote: »

A trust affects the beneficial interests of the joint owners. We don't register the specific details of the trust. If you apply for a restriction on the title to for example protect it and indicate to others that one exists then that is what the restriction does. If no restriction is registered then a trust can still exist and be legally binding, hence my explanation re TIC or JTs being added.

What is TIC and JTs? Are you simply saying that ultimately if no restriction is applied, the Will we make still suffices i.e. to state that the property will be given to both children once they are 18 should we both die, and that named trustees will look after it until then? If so, is there any purpose or advantage in our situation of applying for a restriction - what will it add?

Land_Registry wrote: »

We register land/property and it's legal ownership
And the easiest way I find to describe that, and which may in some small way help to understand why our guidance will not cover the majority of your Qs, is that:-

the legal ownership is of the property, namely the land and building(s). that can't be split as in you have half the land, bricks & mortar and you have the other half when you are both 19; whilst

the beneficial ownership is the £s and ps, namely the value of the property. Now that can be split as in you can have half the value each as and when you are 18.

Im confused as to what you are saying here. Please could you try explain again? What is the point you are making about bricks and mortar when the children turn 19? Can I just check that you are not saying that once they turn 18 they cannot both own the house and have it as joint owners i.e. and to be able to live in it rather than sell it? I know if it gets sold when they are 18 then they would get 50% of the profits, but we also want them to be able to keep the house for a bit if they dont want to sell it?

Thank you.

Yorkshireman99

TheDirector wrote: »

Thanks for your reply - but I am not sure what you mean by a few things:




What is TIC and JTs? Are you simply saying that ultimately if no restriction is applied, the Will we make still suffices i.e. to state that the property will be given to both children once they are 18 should we both die, and that named trustees will look after it until then? If so, is there any purpose or advantage in our situation of applying for a restriction - what will it add?



Im confused as to what you are saying here. Please could you try explain again? What is the point you are making about bricks and mortar when the children turn 19? Can I just check that you are not saying that once they turn 18 they cannot both own the house and have it as joint owners i.e. and to be able to live in it rather than sell it? I know if it gets sold when they are 18 then they would get 50% of the profits, but we also want them to be able to keep the house for a bit if they dont want to sell it?

Thank you.

You really need to talk to a trust specialist face to face. Helpful as the comments on here are to a novice they just get more confusing.

TheDirector

Yep I will do - I will go see a solicitor. But I would still like Land Registry to answer my question / clarify what they meant...

Yorkshireman99

TheDirector wrote: »

Yep I will do - I will go see a solicitor. But I would still like Land Registry to answer my question / clarify what they meant...

Also ensure they are a STEP member. Trust law is incredibly difficult as is the beneficial interest concept. I make no claim to understand either. Many high street solicitors don’t either. It makes my brain hurt thinking about it!