Changing wills later in life

whatsthenews

wilfred30 said:

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

When they made their wills they each  had substantially less in savings than they have now. 
Dad is almost 90 and Mam 85 .
They're in a position now ( due to not spending much money in the last 5 yrs due to Dad's  ill health initially, COVID and now Mam's health issues) that they both have enough savings and income  of their own to live comfortably without an inheritance from one another, especially Dad from Mam. 
 Changing their wills would mean they can leave some of the money that would come to us ( myself, husband and only grandson ) at the first death. 

whatsthenews

Keep_pedalling said:

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.

The 4 of us ( both parents and myself and husband) are  Trustees  and beneficiaries. The house can't be sold as long as either of them are still living in it. That's written into the trust.
The house is the only assett
I understood that if it was sold when only one of  them is still alive , as it's the surviving persons main residence , their won't be Capital Gains to pay 
Am I wrong?
I'm unsure about about CG tax rules when the property  is disposed of when neither parents  are still alive . 
IHT doesn't apply as they're nowhere near the £325k threshold

They have sufficient income / assets to fund " social care" costs for some time. 
As I understand it, the LA don't take the value of  any property into consideration in an assessment if the spouse will still be living in it.  

SeniorSam

We are told that the property was gifted into a Discretionary Trust 8 years ago but seemed to have an Interest in Possession for the survivor following the first death.  The type of Trust needs to be clarified.

In any event, if the property is sold by the Trust for another property, or to go into a rented property, the any surplus capital is an asset of the Trust and will remain part of the Trust. Such  capital  may need to be invested and not gifted to beneficiaries until after the second death. However, the wording of the Will needs clarification

If there are any care costs, they will need to be paid, as it would seem that the action of placing the property in Trust was only done to try and protect it from care costs, possibly through poor advice.

Capital gains tax may be payable by the Trust if there was a gain above the Trust allowance from the value when it went into the Trust and at the date of sale.

It would be best to seek the guidance of a solicitor in this case as the OP seems uncertain of the position.

getmore4less

whatsthenews said:

Keep_pedalling said:

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.

The 4 of us ( both parents and myself and husband) are  Trustees  and beneficiaries. The house can't be sold as long as either of them are still living in it. That's written into the trust.
The house is the only assett
I understood that if it was sold when only one of  them is still alive , as it's the surviving persons main residence , their won't be Capital Gains to pay 
Am I wrong?
I'm unsure about about CG tax rules when the property  is disposed of when neither parents  are still alive . 
IHT doesn't apply as they're nowhere near the £325k threshold

They have sufficient income / assets to fund " social care" costs for some time. 
As I understand it, the LA don't take the value of  any property into consideration in an assessment if the spouse will still be living in it.  

That loophole for lifetime  life interest trusts was closed in the finance act 2006.