Registering a life interest in possession trust

Eek_Bears

Hi All, my Mum died leaving my Dad to live in the house until his death but then her half of the house to be split between children, ie a life interest trust. 

This was a bit of a surprise but having done a bit of reading it seems like it was a good idea. If Dad ends up in care that bit of the house is ring fenced and there doesn’t seem to be any sting in the tail in terms of IHT or CGT implications.

The one issue I have as executor and trustee is what is the additional admin burden? My reading of this guidance on the .gov website suggests I might need to register the trust. Is that right? I wonder what that will involve

https://www.gov.uk/guidance/register-a-trust-as-a-trustee#when-to-register

Eek_Bears

Just to add obviously I realise I can’t change the will, the question is more whether I will need to get admin support from a solicitor / accountant for the trust aspect.
Apart from the trust there’s nothing that could be described as complicated, just a little bit of cash in the building society, so I was hoping to DIY on being an executor 

SeniorSam

A Will can be changed within two years of death by Deed of Variation, but is there a need for a change.

Answers to help can only come if sufficient information is available, so can you say approximately what the value of al assets are, as there my not be a liability to inheritance tax.

It would seem that the house was owned as Tenants in common (50/50) so  when your Mum dies (when was this) her half of the house was gifted to a Trust and Trustees were appointed. Who are the Trustees in addition to yourself?  How many children are there and are they all over 18?

Sam

getmore4less

For trust that have no reporting you don't need to register with HMRC.

https://www.gov.uk/trusts-taxes/registering-a-trust

If the only asset in the trust of a life interest property there won be any tax.

Eek_Bears

Thanks for the replies.

SeniorSam, there’s about £50k in the building soc and house is c.£250k owned as tenants in common with Dad with equal shares. Mum died about 6 weeks ago, just after new year. Me, my brother and my Dad are trustees. All children are over 18.

getmore4less if I have understood properly HMRC have this year expanded the list of trusts they want to register to include non taxable trusts except for a few exceptions, none of which mum’s will trust seems to meet.

Eek_Bears

Any other trustees out there who might have registered a similar trust?

SeniorSam

There is no need to register this Trust and the way the Trust was set up by being created automatically on the death of your Mum was a way to ring fence the value of the house for the beneficiaries.

The Trustees should register the half value held in trust at the land Registry, so that there is an entry on the Register showing the owners 50/50 are your dad and the Trust .

Your Dad has a lifetime interest, which means that he is protected and the house cannot be sold whilst he is alive. The exception being if he wanted to move to a smaller property, or if he were to need to go into a care home, then the house could be sold with agreement of the Trustees, or not, but the money remains part of the estate to maybe buy another property, or be invested to produce an income to support your father and pay the care home fees. The executors and Trustees have to maintain the value until he passes.

When that time comes, the Executors and Trustees need to obtain Probate showing the half value of the home owned by him plus any other assets he may have.  It is unlikely that inheritance will be payable if the value is below the allowances of two nil rate bands and two Residential allowances. Therefore a Probate application form, Death certificate and Will to obtain Probate.

Do ask if you need more

Eek_Bears

Thanks SeniorSam, all makes sense. 

Have I misunderstood that the list of trusts which have to be registered is now (from this year) substantially longer, all in the name of preventing money laundering? 

https://www.gov.uk/guidance/register-a-trust-as-a-trustee#not-register