Preparing for Probate

Yozza

   Our financial adviser suggested we consider setting up a discretionary trust to put our house into to firstly,remove it from probate charges and secondly,to make probate a lot easier and quicker to sort out. We called in an "estate manager" lawyer to revise some details on our wills and,at he same time,set up the trust. It appears to do everything we wish and is accessible if needed. In fact, it seems too good to be true. Has anyone had experience of this and may be able to point to any pitfalls?
                                                                                   

p00hsticks

What is the value of the house and the rest of the estate ?

To whom will you be leaving it ?

Which country are you in ?

Generally speaking as far as I'm aware trusts are an unecessary complication and just a way for financial advisers to make money....

Keep_pedalling

I would get a new “financial advisor” this is a terrible idea. 

SeniorSam

Be careful.  It is a very serious step to gift your house into Trust and if you do, then you cannot remain there unless you pay full market rent, otherwise the gift will fail as you would be retaining a beneficial interest. Nothing at all to do with Probate as that is usually needed when someone dies.

It used to be a way of protecting the asset from care costs and to help mitigate inheritance costs, but since the Residential allowance for each person owning property together with the inheritance nil rate band allowance for each, your estate needs to be above £1 Million before inheritance tax would take effect.

There are other ways to ensure that certain capital is protected for your children, but no doubt your financial adviser has also advised you about these.

More detailed guidance may be available if we knew more about the value of your estate and how your property is presently owned? One owner, jointly, or in tenants in common? Also who you wish to inherit your estate.

Keep_pedalling

I do find it amazing that anyone would suggest a discretionary trust to simplify things, when in reality it is going to make things far more complicated. The tax implications alone should put any off thinking about doing this.

SeniorSam

There are not always tax implications connected with Discretionary Trusts. It depends entirely upon how the Trust is managed, what is held in the Trust and how any investments are managed. However, knowing the full facts and understanding them clearly before taking any action is essential. Always wise to get more than one opinion before taking any action. If you are thinking about Executors or Trustees, again, take care to consider future costs if non family members are appointed.