Sale of house by Trustees

AdrianC

Annisele said:

(But even then, if you're right to say the "last beneficiary" has died, and you are a beneficiary under their will, you might have some rights in that capacity.)

But, of course, Uncle Fred didn't own the property - so couldn't leave it in his will.

lunarjan

Thankyou for this. Yes, I haven’t explained it very well. The Trust was set up by my grandfather who died in 1946. His four children all received income for life from the invested capital, and there was also a property, which has generated rental income for the life tenants. As the life tenants died their respective children inherited their share of the capital from investments, but decided to retain a share of the property and thus an income from rental. This I understood to be a “vested interest” in the property, but perhaps I’m wrong? The property itself has not been well managed over the years, and at the moment is let to a charity who use the ground floor shop, and sublet the three story maisonette above it. The tenants are responsible for the repairs, which are now long overdue, and there has been some attempt to get them to do it, although nothing much has happened as yet, hence the property had a low valuation for Probate.

Then earlier this year the last life tenant died, her daughter and husband are the Bare Trustees. The daughter announced that the property was going on the market. 

I emailed all the cousins suggesting that we look at options for improving the value before it is sold. The Lease has two years to run, which gives the tenants time to do the repairs plus we would continue to receive the rental income for that time, then we could either sell it or renew the Lease. I understand that it could be transferred into all our names, but I’m still researching the various tax scenarios. 

My brother and one other cousin agree with me, one cousin hasn’t replied, another one is helping with the sale, two more live abroad and I’ve no idea what they think (their sister is a Trustee and hasn’t included them in the round robin emails, and she was cross with me when I copied them in a while ago), and one is dead although her share of the rental goes to charity at the moment, as she wished.
I thought that Trustees have to act in the best interests of the beneficiaries? They did not reply to my questions and suggestions about the possible options for the property, nor has there been any explanation of why the sale would be the best option. Although the annual rental was not a huge amount, it made a difference to me as I am retired and live on a limited income, and my share of the current sale value would only provide the equivalent of about 8 years of that income, whereas if it was retained as a family asset the income could continue for many years.

AskAsk

so from what i can understand, the cousins, including yourself are the beneficiaries?  so the last beneficiary hadn't died at all?  you said the last beneficiary died!

lunarjan

Yes I’m not too good at legal language. The last life tenant, a beneficiary of my Grandfather’s Trust died earlier this year. Referring to myself as a beneficiary may be wrong? I used that word as I receive an annual income from the Trust Property, as do my cousins, but am happy to be corrected. Sorry for the confusion.
 It just doesn’t make sense to me to sell the property cheaply, when the tenants are responsible for repairs, and once those are done it could command a higher price. 

I’ve also asked the Trustees what the tax situation would be, as there might be options to minimise that too. I just feel that our best interests are not being considered, we need more discussion.

steampowered

It might not be fair to be expecting all of the beneficiaries to retain an interest in this property. That may mean they need to file a tax return or pay higher rate stamp duty when they move home, for example. If you wish to continue receiving an income, you can invest the capital you receive when the property is sold.

It also might not be fair to expect the cousin and her husband to continue managing the property / managing works if they are not willing to do that and are not being paid for it.

Are you sure that the tenants are responsible for repairs - have you seen a copy of the tenancy agreement? Tenants would often be responsible for looking after the property but not for things like redecorating it or doing any building work.

That said, I think it is reasonable to be asking for a discussion about it.

lunarjan

Interesting points, Thankyou. The tax situation is definitely something which needs investigation on all fronts.
The cousin and her husband decided that they were the Trustees without any family discussion. I’d happily take over any management needed.

Yes, according to the Lease, the tenants are definitely responsible for the repairs, and were asked some time ago to make a start on them, nothing has been done for many years.

getmore4less

IF as each life tenant died that share vested absolutely to remaindermen, not sure they can leave those shares in the IIP trust.
If not they should have become joint legal owners with the trust as each life tenant died.
What are the terms of the trust on the death of the last life tenant? 

martindow

Is this a tontine? 

AskAsk

lunarjan said:

Yes I’m not too good at legal language. The last life tenant, a beneficiary of my Grandfather’s Trust died earlier this year. Referring to myself as a beneficiary may be wrong? I used that word as I receive an annual income from the Trust Property, as do my cousins, but am happy to be corrected. Sorry for the confusion.
 It just doesn’t make sense to me to sell the property cheaply, when the tenants are responsible for repairs, and once those are done it could command a higher price. 

I’ve also asked the Trustees what the tax situation would be, as there might be options to minimise that too. I just feel that our best interests are not being considered, we need more discussion.

as far as i understand a trust is run by trustees for the benefit of the beneficiaries.  the trustees have powers to administer the trust and what those powers are will be set out in the trust deed.  the benificiaries will be defined in the trust, and in this case, it may also include their individual names.

if you want to dispute the sale of the property, you would need to get hold of the trust deed and check if your cousin and her husband had the right to nominate themselves as trustees and whether, as trustees, they have the power to sell the property without consulting you and your cousins.

you need to check the deed to see what exactly are your interest as defined in the deed, that whether you are actually named/considered as beneficiaries or whether you are only considered to have an interest in the trust and get income, but have no power to vote or consulted by the trustees in any action they may take or any decisions they may make about the trust's assets.

AdrianC

lunarjan said:

The Trust was set up by my grandfather who died in 1946. His four children all received income for life from the invested capital, and there was also a property, which has generated rental income for the life tenants. As the life tenants died their respective children inherited their share of the capital from investments, but decided to retain a share of the property and thus an income from rental.

OK.

Then earlier this year the last life tenant died, her daughter and husband are the Bare Trustees. The daughter announced that the property was going on the market. 

OK.

And did the trust say what was to happen to the trust (and the assets thereof) on the deaths of the last of your grandfather's children?

Since the trust seems to have allowed the inheritance of the income arising from the investments, did it specify anything else? If the building was an investment property, not residential for any of the four children, was it even explicitly stated that it was part of the trust? Or was the building just an asset managed by the trust, like any other?

The property itself has not been well managed over the years, and at the moment is let to a charity who use the ground floor shop, and sublet the three story maisonette above it. The tenants are responsible for the repairs, which are now long overdue, and there has been some attempt to get them to do it, although nothing much has happened as yet, hence the property had a low valuation for Probate.

I emailed all the cousins suggesting that we look at options for improving the value before it is sold. The Lease has two years to run, which gives the tenants time to do the repairs plus we would continue to receive the rental income for that time, then we could either sell it or renew the Lease.

The trustees are responsible for management of the trust.

Other cousins are in the same position you are... which is that you are not responsible at all. The trustees can choose to take your concerns and suggestions on board, or to ignore them.

I thought that Trustees have to act in the best interests of the beneficiaries?

Yes - but is that the original four children, all of whom are now dead?
Or is it all of their descendants until the end of civilisation as we know it...? If your generation, why not your children's and grandchildren's generations? And on and on?

They owe no duty of care to anybody else, except as is described in the trust paperwork.

They did not reply to my questions and suggestions about the possible options for the property, nor has there been any explanation of why the sale would be the best option. Although the annual rental was not a huge amount, it made a difference to me as I am retired and live on a limited income, and my share of the current sale value would only provide the equivalent of about 8 years of that income, whereas if it was retained as a family asset the income could continue for many years.

Forget the principle of "the building".

You appear to be arguing that the trust has been generating an annual 12.5% return on investment, and that should continue indefinitely. Apart from that sounding MASSIVELY unlikely (apart from anything else, you admit the building needs a large capital injection, and the tenants are on short leases), you are basically telling the trustees what they should do in the management of the trust. No, you can suggest. If you want to play a more active role, become a trustee.