Changing wills later in life

whatsthenews

Hi.
My parents are 85 (M) and 89( F).
Living in their own property owned outright which is in a discretionary trust which kicks in after the first death. They own as joint tenants.
After the first death the property passes equally to the beneficiaries who are myself and husband and remaining partner. 
My father was diagnosed with dementia lady year and requires carers 3 X daily to help with medication ( mum could no longer be relied upon to ensure he took them), dressing, washing etc etc. 
Mum has short term memory loss but no dementia according to GPs  very recent assessment 

It's becoming clear that we're reaching the stage where we'll have to consider them moving onto some sort of assisted/ sheltered housing as Mum is now starting to struggle with planning meals, food shopping , laundry etc. Myself and husband have been supporting more and more over the last 5 years, especially with all the ongoing/ changing  health issues ( I'm an ex nurse) and maintaining the home and managing finances. 
Dad was always the person who managed the finances . Mum had her "own" money that she earned and spent as she wished. Contributed small amounts to household budget, but nowhere near even 30%. She has no interest in the finances and was very happy to pass them over to us when Dad became unable to do so last year.


They have savings that put them well over the threshold for social care funding. 
Their current  wills  were made about 10 years ago, and at the first death , they're each the sole beneficiaries.

As they're not really spending any money other than household bills and carers fees, they're savings are increasing, and if they move into sheltered accomodation then they'll obviously sell the house they live in now.

The 2 scenarios are that they buy a flat in sheltered d accomodation , or rent, buy the options to rent are few and far between. 

My questions are 
1.  if they sold and rented , does the money from the house sale go into their estate, or would some of it pass to myself and husband?
2. What about the proceeds  from the sale if they bought and the new property cost  less than the value of their current home. ? I'm assuming that that amount would definitely be added to their estate, and the new property would be added to the trust ? 

3. what are the legalities regarding them ammending their wills so that, on the first death, some of their estate passes to us ( I'm an only child) or our son ( their only grandson)
I believe  they both have capacity to understand the pros and cons of doing this and to retain the information long enough to make a decision.. 
What I'm not clear about is whether, as attorneys, we'd be placed  in a legally compromised situation if we were to benefit from a will change and whether there's any implications re deliberately trying to reduce liability for social care charges . The way I see it is that they themselves  wouldn't reduce their own liability by changing their own will. 

I know they aren't allowed to give money away , even to financially  struggling children or grandchildren, without raising suspicion, but unsure about some other aspects. 

getmore4less

Living in their own property owned outright which is in a discretionary trust which kicks in after the first death. They own as joint tenants.

That does not sound right

On first deaths the property become the sole ownership of the joint tenant if they are really joint benefitial tenants.

If it is in a trust already and they are still legal owners they are just trustees.

getmore4less

To change any wills they need capacity.

Not sounding that great for dad.

Keep_pedalling

Are you sure you are talking about a discretionary trust? Any trust that is triggered by a will does not come into effect until the testator dies so it won’t be in place now, so if they have to sell the house the proceeds will belong to them rather than a trust.

if one dies their will can put their share of the house in trust, but it can’t put the survivors share in trust, so I think you may be misunderstanding what the will actually does. Normally a life interest trust would be more appropriate here rather than a discretionary trust.

whatsthenews

Sorry, yes, the house is owned by the trustees  as my husband and I had to sign all the documents when they sold and bought 4 years ago. 
I'm getting confused with how we own our own home as tenants in common
So the 
I understand how it works when I look at the document and when they were selling and buying , but I do sometimes forget😒
So when I'm talking about their wills, it's everything except the house that passes to the survivor. On the death of the survivor , everything comes to me 
Regarding the trust , when one of the 4 trustees dies , our son could be added as a trustee and he could be added as a beneficiary at any point? 

whatsthenews

getmore4less said:

To change any wills they need capacity.

Not sounding that great for dad.

Difficult one. He's in the early stages and I do think he has to capacity to understand the implications of the way the wills are set up ATM, ie ,that it would increase the survivor ( particularly Mums) liability to social care charges, but that some of his estate ( enough for Mum to not have any worries about money ) would still go to her. He'd also be amenable to some going to his only grandchild, who he dotes on. He still shows an understanding of some issues such as how difficult it will be for his grandson to get onto the property ladder . 

Marcon

whatsthenews said:

Sorry, yes, the house is owned by the trustees  as my husband and I had to sign all the documents when they sold and bought 4 years ago. 
I'm getting confused with how we own our own home as tenants in common
So the 
I understand how it works when I look at the document and when they were selling and buying , but I do sometimes forget😒
So when I'm talking about their wills, it's everything except the house that passes to the survivor. On the death of the survivor , everything comes to me 
Regarding the trust , when one of the 4 trustees dies , our son could be added as a trustee and he could be added as a beneficiary at any point? 

Definitely one where you need proper legal advice - the scope for confusion and error is just too great.

Keep_pedalling

Marcon said:

whatsthenews said:

Sorry, yes, the house is owned by the trustees  as my husband and I had to sign all the documents when they sold and bought 4 years ago. 
I'm getting confused with how we own our own home as tenants in common
So the 
I understand how it works when I look at the document and when they were selling and buying , but I do sometimes forget😒
So when I'm talking about their wills, it's everything except the house that passes to the survivor. On the death of the survivor , everything comes to me 
Regarding the trust , when one of the 4 trustees dies , our son could be added as a trustee and he could be added as a beneficiary at any point? 

Definitely one where you need proper legal advice - the scope for confusion and error is just too great.

And tax advice, discretionary trusts have some pretty hefty tax rates applied to them. Also expect the LA to look into deprivation of assets if residential care comes into the equation.  

whatsthenews

Keep_pedalling said:

Marcon said:

whatsthenews said:

Sorry, yes, the house is owned by the trustees  as my husband and I had to sign all the documents when they sold and bought 4 years ago. 
I'm getting confused with how we own our own home as tenants in common
So the 
I understand how it works when I look at the document and when they were selling and buying , but I do sometimes forget😒
So when I'm talking about their wills, it's everything except the house that passes to the survivor. On the death of the survivor , everything comes to me 
Regarding the trust , when one of the 4 trustees dies , our son could be added as a trustee and he could be added as a beneficiary at any point? 

Definitely one where you need proper legal advice - the scope for confusion and error is just too great.

And tax advice, discretionary trusts have some pretty hefty tax rates applied to them. Also expect the LA to look into deprivation of assets if residential care comes into the equation.  

The trust was set up 8 years ago when my parents were both fit and well. The only asset held by the trust is their home with a value of about £170k which is what they purchased it for ,or maybe slightly less because it hasn't been very well maintained.

Not much we can do about the trust as it's there now and that's what my parents  were advised to do by the solicitor at the time. He did explain the 7 year rule and that the LA could possibly  use the DofA depending on when care was needed. 

Are you talking about the LA looking at a  change in dad's will as deprivation of assets, and if so , whose assets?  

wilfred30

I don't know if I've missed it but, what is the advantage to your parents of changing their Wills now?

Keep_pedalling

whatsthenews said:

Keep_pedalling said:

Marcon said:

whatsthenews said:

Sorry, yes, the house is owned by the trustees  as my husband and I had to sign all the documents when they sold and bought 4 years ago. 
I'm getting confused with how we own our own home as tenants in common
So the 
I understand how it works when I look at the document and when they were selling and buying , but I do sometimes forget😒
So when I'm talking about their wills, it's everything except the house that passes to the survivor. On the death of the survivor , everything comes to me 
Regarding the trust , when one of the 4 trustees dies , our son could be added as a trustee and he could be added as a beneficiary at any point? 

Definitely one where you need proper legal advice - the scope for confusion and error is just too great.

And tax advice, discretionary trusts have some pretty hefty tax rates applied to them. Also expect the LA to look into deprivation of assets if residential care comes into the equation.  

The trust was set up 8 years ago when my parents were both fit and well. The only asset held by the trust is their home with a value of about £170k which is what they purchased it for ,or maybe slightly less because it hasn't been very well maintained.

Not much we can do about the trust as it's there now and that's what my parents  were advised to do by the solicitor at the time. He did explain the 7 year rule and that the LA could possibly  use the DofA depending on when care was needed. 

Are you talking about the LA looking at a  change in dad's will as deprivation of assets, and if so , whose assets?  

The 7 year rule applies to inheritance tax not to deprivation of assets. It does not even apply to inheritance tax unless they are also paying the trust full market rent, as it is treated as as a gift with reservation of benefit.

If your parents decided that the house is no longer suitable for them do they have sufficient assets / income to rent somewhere or will they be relying on trust to at least part fund the rent?

As a trustee you need to be away that if the house is sold you are going to need to register the trust with HMRC, and are going to need to do tax returns to cover income tax snd CGT on the cash released.