Property trust enquiry

rachelleigh73

Hi - I have recently taken out a joint mortgage on a residential property with my sister's partner. I live there with my sisters family - they have 2 dependent children. Her partner has an adult child from a previous relationship who does not live at the property. The residents of the property would like to explore ways of protecting the residential rights of the family members who live at the property should something happen to either of the mortgage holders. I'm wondering if a trust or a similar structure would achieve this. I have contacted a local solicitor who has sent us some general info on wills and LPA's (and their charges!) but didn't engage with the question of creating a property trust or something similar. I will obviously need a solicitor so will make contact with others - but wanted to ask the forum - does a property trust work in the way that I think it might? Any general advice or guidance would be very much appreciated - thank you!

p00hsticks

Not an expert but I would think the first thing to get in place is some form of life insurance for the two people on the mortgage, to ensure the mortage is paid off in full in the event of their deaths.  After all, there's no point in worrying about trusts etc if the outstanding mortage can't be repaid from the estates.

Keep_pedalling

You can draw wills up that would set up a lifetime interest trust on your death, but the complex family set up could create difficulties for the ultimate beneficiaries of your estate.

RAS

Do you have a deed of trust confirming the split between yourself and BIL when you sell? Is it joint or tenants in common?

rachelleigh73

RAS said:

Do you have a deed of trust confirming the split between yourself and BIL when you sell? Is it joint or tenants in common?

Thanks for replying. The reason I'm asking on the forum is to get an understanding of how a trust might work for us with a view to getting something in place. We are joint mortgage holders, currently without a deed of trust. I hope that helps! Thank you 😊 

rachelleigh73

Keep_pedalling said:

You can draw wills up that would set up a lifetime interest trust on your death, but the complex family set up could create difficulties for the ultimate beneficiaries of your estate.

Thanks for replying. Can a trust be active during our lifetimes? Might it be possible to put the property into a trust structure now so that all current residents have a legal stake in the property - not just the people currently  named on the mortgage? And yes - in the event of the death of BIL we would like to see his share of the property ring-fenced so that it doesn't form part of his estate and cause a potential problem down the line... Thanks again... 😊

rachelleigh73

p00hsticks said:

Not an expert but I would think the first thing to get in place is some form of life insurance for the two people on the mortgage, to ensure the mortage is paid off in full in the event of their deaths.  After all, there's no point in worrying about trusts etc if the outstanding mortage can't be repaid from the estates.

Done! Now to the question of a possible trust...

Keep_pedalling

Putting your home into trust is not something I would recommend, it complicates things if your personal circumstances change, and you you need to move elsewhere, it will also have potential negative tax implications. Selling a home you own is exempt from CGT, that is not the case if the house is owned by a trust.

SeniorSam

rachelleigh73 said:

RAS said:

Do you have a deed of trust confirming the split between yourself and BIL when you sell? Is it joint or tenants in common?

Thanks for replying. The reason I'm asking on the forum is to get an understanding of how a trust might work for us with a view to getting something in place. We are joint mortgage holders, currently without a deed of trust. I hope that helps! Thank you 😊 

If you have a mortgage, you would need the approval of the lenders to effect a trust. That is unlikely as the lenders will require first call on the property.

Savvy_Sue

There is a difference between "putting your home into a trust" and having a "deed of trust" - the latter sets out the shares in which a house is held. 

For example, we bought our house with a friend: he used to own half of it, now he owns 12.5% and we have a deed of trust which sets this out. When we sell, he gets 12.5%. 

It sounds as if you need the latter too. 

rachelleigh73

Savvy_Sue said:

There is a difference between "putting your home into a trust" and having a "deed of trust" - the latter sets out the shares in which a house is held. 

For example, we bought our house with a friend: he used to own half of it, now he owns 12.5% and we have a deed of trust which sets this out. When we sell, he gets 12.5%. 

It sounds as if you need the latter too. 

Thanks Sue - we currently have an informal written agreement - but think we will take the opportunity to get it on a more formal footing - appreciate the advice!