Flexible Family Trust

SeniorSam

meishka   - my reply was regarding your post and not pbrookes64 , so apologies for not seeing this.

Replies can get confusing when someone replies to one post where they have has a similar situation and replies get jumbled up.

However, to pbrookes64, it also applies to your situation as you can obviously see and it is good that you have both removed to respective companies as Trustees. I hope other viewers will be wary of these sort of tactics used to possibly try and gain an advantage without their clients being fully aware of the implications.  

My earlier reply applies to both situations and provided your Wills are now correctly worded regarding the appointed Trustees you can rest easier.  If I can help further, please ask.

pbrookes64

Many thanks again 
As the trust is not registered with hmrc and the house was gifted to the trust by us is it possible to simply transfer the house back to us as the original owners via a land registry AP1?

SeniorSam

You need to bear in mind when the Trusts were effected and when they received assets into the Trust.

Did you check up on this when the question was asked earlier and you said you were unsure if the property had been put into Trust or was effective from the date of death, which is usual?

With the Will only having been made in 2021, the following may not apply, but the point being that once gifted into Trust, either by gift or through the wording of a Will on death, the property then becomes a Trust asset. Depending on how it is then disposed of may attract taxes from gains obtained between dates of receipt and disposal, so you need to take care when the property has gone to the Trust through death or gift.

A Deed of Variation could change the Will within two years of death, or where death has not happened, a Codicil may be suitable to change the Will in an appropriate way.

Thinking of how the normal way a Will Trust works and the reason for setting it up in the first place, it was to 'shelter' the value of half the property.  Better still, the wording of the Will could be for an amount up to the nil rate band allowance to be placed into Trust, which gives flexibility of the amount sheltered.

With the right wording of the Will and Trustees authority, that could be used in a way that would allow the property not to be split, but pass to the survivor. and still shelter up to the nil rate band allowance.

Sam

pbrookes64

thanks thank Sam but I guess I confused you by tagging my question onto the other we had a will drawn up by the same person which makes no mention of the trust it’s just a straightforward will the trust documents are entirely separate 
what a mess!

SeniorSam

Now you have confused me with ..... 'the trust documents are entirely separate'

Can you please clarify that for me ?

In general, as long as you are happy with your Wills and bearing in mind that a married couple can now have an estate of £1,000,000 before inheritance tax.

Many couples do not bother with Will Trusts since the higher allowance was made available and as far as Care costs go, the level of care in Council run Care Homes is not what most families would wish for their parents, so if it comes to that, be prepared to pay for what you would wish for yourselves.

pbrookes64

We had a mutual will drawn up that leaves our respective estates to each other and then on to our only son 
we were told that to avoid care home costs we could put our home into a trust we are both settlers our son is the beneficiary 
all three are trustees 
we weren’t told about inheritance tax implications or capital gains tax. Essentially we have a will and trust deed drawn up independently of each other 

SeniorSam

I am trying to clarify the position for BOTH of you.

meishka, correct me if I am wrong but I believe that your father is still living, in which case when your mother in law died, her half of the home was gifted into Trust by the Will and is sheltered by the Trust, with a life tenancy for your father to remain and even change homes if he wishes using all the value but half being within the Trust.

When your father dies, then it all passes to the beneficiaries.  It is more complicated to reverse this now, but in view of the fact that the details were not made clear to you, I believe that this could be changed if you engaged a solicitor to help, although there should not be any more problems if you wish the Trust to remain.

''''''''''''''''''''''''''''''''''''''''''''''
pbrookes64. A similar position though no Trust yet exists as  a death has not happened to start this. As you have likewise got rid of the bad Trustees, your family would control a Trust when created on the first death. If you no longer wish to shelter half of your home in Trust when the first of you die, then a Codicil to your Wills could exclude the Trust completely. Not too costly with a competent solicitor and you should obtain quotes if you wish to go along that route (probably around £50-75, but dont let them do New Wills as it's not necessary as a Codicil will work.

FOR YOU BOTH, although you may have both been involved with rather poor quality Will Writers who did not clarify the details of their actions, the fact is that these schemes were mainly for the sheltering of half the family home up to the nil rate band allowance. 

They were more popular before the Residential Allowance came into force to enable an estate of up to £1,000,000 to avoid inheritance tax. They still do protect that half value of IHT  to pass on to your beneficiaries even if everything else does not.

I do hope that I have now understood the two cases correctly and that my guidance may be helpful, or ask more if you wish.

Sam

pbrookes64

Thanks Sam final question hopefully can we go back to square 1 return title of our home which currently belongs to the family trust on the land register to ourselves by simply transfer via AP1 ?

SeniorSam

I believe that the Registry office may need more than just to AP1 form, but am not sure. They do have a helpline and it would be best to call them, explain the position and see what they need.

In view of the fact that the half home is already registered in favor of the Trust to be held for the beneficiaries, it may involve the beneficiaries also agreeing as long as they are adult. If not adult, then it may prove more difficult.

Perhaps other members may like to add to this particular part of the question?