Mums house in a trust

Worried_of_wakefield

Hi all, I was unsure where to place this post but hope someone here can provide clarity.

My mum placed her small home ( say £100k) into a trust for me and my brothers & sister, she is 82yr old but in reasonable health so don't anticipate her going anywhere soon. She believes that in September 2019 ( 10 years anniversary of the trust) the legal ownership of her home will in someway automatically transfer to us. Is this correct? and if so what are the legal and financial implications. Obviously she will remain in her home whilst she is fit and able

Many thanks in anticipation

elsien

Is she getting mixed up with the 10 year inheritance tax possibility?

https://www.gov.uk/guidance/trusts-and-inheritance-tax#inheritance-tax-and-excluded-property

What sort of trust did she set up and who are the trustees?

Browntoa

Ask the solicitor who set it up ?

Marcon

She may well have been told that by whoever sold her this arrangement as a means of avoiding inheritance tax (which wouldn't have been payable, in all probability, simply because of the IHT threshold, especially when property is left to offspring) and/or care home fees.

What does the Land Registry entry say in terms of ownership?

SeniorSam

NO, that is not correct. The Land Registry should clarify that the Deeds are in the name of your mother and the Trust with the named Trustees. When your Mum dies and you have obtained Probate, the Trust can be broken up and the house sold with the proceeds going to the beneficiaries named.
If this is a Discretionary Trust, the Trustees have the option to pass on their interest to the next generation if they do not wish to add that value to their own estate value. There may be capital gains tax for the Trust to pay when your Mum has died,so professional advice should be sought.

Land_Registry

SeniorSam wrote: »

NO, that is not correct. The Land Registry should clarify that the Deeds are in the name of your mother and the Trust with the named Trustees. When your Mum dies and you have obtained Probate, the Trust can be broken up and the house sold with the proceeds going to the beneficiaries named.
If this is a Discretionary Trust, the Trustees have the option to pass on their interest to the next generation if they do not wish to add that value to their own estate value. There may be capital gains tax for the Trust to pay when your Mum has died,so professional advice should be sought.

The Land Register will confirm the legal ownership and will probably indicate that a trust exists but only IF she applied for a restriction to be registered - see Private Trusts
It is extremely unlikely that the register will name the trustees though but a check if the register would confirm

Keep_pedalling

Marcon wrote: »

She may well have been told that by whoever sold her this arrangement as a means of avoiding inheritance tax (which wouldn't have been payable, in all probability, simply because of the IHT threshold, especially when property is left to offspring) and/or care home fees.

What does the Land Registry entry say in terms of ownership?

More likely to have been advised to do this to avoid paying care costs, although as there appears to be no other legitimate reason to put the house in trust that would likely to be deemed as deliberate deprivation of assets so is likely to fail.

As for the 10 year puzzle, the only thing that happens after 10 years on some types of trust is a tax liability, but that only applies if the trust exceeds the NRB,

Sea_Shell

What was the motivation for the trust? As it seems a bit extreme for an £100k property.

SeniorSam

Just a thought, have you been paying the upkeep of the home during the past 10 years? As your Mother continues to have the full benefit of the house, has she been paying a normal rent for occupation, or has the Trust been worded to cover this benefit. A gift whilst retaining the benefit of that gift is not deemed to be a gift and as such will remain part of her estate value. Whoever arranged the Trust had a duty to advise you of this.

Worried_of_wakefield

Thank you ( everyone ), The trust was set up un-beknown to us, I assume during a visit to a solicitor to set up a will, possible encouraged in order to drum up business that appears not helpful nor needed.
I had already printed off the land registry doc for her to complete her 'in the event of' envelope in her bottom drawer! there is no reference to a trust.

I don't wish to alarm her and am positive she will not reach the IHT threshold. Her will, I am sure will be straight forward. So now that I understand the property will not automatically change ownership at 10yr trust anniversary as she believes I think life should continue. Unless you believe I have missed something. Many thanks

Worried_of_wakefield

Just a thought, have you been paying the upkeep of the home during the past 10 years? As your Mother continues to have the full benefit of the house, has she been paying a normal rent for occupation, or has the Trust been worded to cover this benefit. A gift whilst retaining the benefit of that gift is not deemed to be a gift and as such will remain part of her estate value.

No, we have only recently found out about the trust