Lifetime trust for FIL's new flat purchase for predatory marriage defence

Disjoint

Hi all,

We got advice today from a solicitor so removed most of the questions I had as now irrelevant:
It's actually a lot simpler than I had made it out to be. Thanks for the person who told me I was making this thing a lot more complex than it needed to be. 

A trust with well defined beneficiaries and trustees sorts most of this issues out (including some of the concerns some of you had). Still not bullet proof, but pretty strong in court. 

Keep_pedalling

I think there is a high level of paranoia here. Your father should not give his home and security away based on a fear of something that is highly unlikely to happen. 

Please encourage him to make a will and put LPA in place, but don’t suggest he do anything as foolish as giving his main asset away.

Marcon

Disjoint said:

Hi all,

To avoid the unpleasantness down the line of possible remarriage while suffering from dementia or any of the beautiful cons older people are now falling victim to, we would like to protect my FIL's (father in law) assets. I've done some research into it, and had some initial conversations with a solicitor, but he wasn't a trust specialist so told me to go and get someone who is to run my proposal by. Before running my proposal to a specialist I want to sanity check it to make sure everything makes sense first or if it's a lost cause to start with.

My FIL will be buying a new flat (replacing main home, so FTB SDLT payable). He wants to make sure that the flat he buys will go to his two daughters and grand kids when he passes away. 
The idea I had was to break it as follow:
1. Put 25% under my wife's name
2. 25% under my SIL's (sister in law) name
3. 50% in a lifetime trust with his daughters as trustees and the beneficiary being my FIL while he is alive, and all his grand kids as beneficiary when he passes away

Question 1: Can a beneficiary not be born yet? In the event my SIL or we have another kid from now until my FIL's passing? In which case beneficiary defined as "any grandkids with 50% of the trust being for the kids of one daughter and the other 50% to the other daughter"
Question 2: What about SDLT? Both daughters have flats - FIL will be living in the property. Will that be payable? Here I see the scenario where my FIL buys 50% under his name for SDLT and then immediately this gets gifted to his daughters under the land registry. For the trust I am not too sure, no one in the trust will have a property and all the grandkids are very small so not an issue for them to buy their future home either.
Question 3: If he remarries later down the line, can the new person upon my FIL's death have a claim to live in that flat. Worse: if she remarries and then asks for a divorce, can she have a claim on that flat? How do we protect this asset as securely as possible in the event of a divorce that didn't have any pre-nups or post-nups drafted?

The idea is to have the flat ownership as air tight not to have any problems down the line. My FIL won't pay us rent to live there, which makes it more complex I understand.
Any suggestions or ideas as to how you would amend or create this ownership I would be grateful for! (Potentially put the entire flat under the grand kids' names, or the daughters' names? Whichever makes it easier, there is only one goal: to make sure the flat stays in the family and that he won't risk losing any of it in a divorce - fully understanding that everything is possible in common law, we just want to be as protected as possible...)

To note: this is not about tax optimisation, as all of the below is not tax optimal and I know it, we would be more than happy to have the council use the flat to pay for care home fees if needed so the aim is purely to protect the assets and let the taxman take everything he wants as long as the taxman takes it, and not some greedy gold digger..
To note: risk of bankruptcy from his daughters - this has already been discussed with my FIL and there is no risk in that respect

You're making this incredibly complicated, which of itself will bring all sorts of risks. I'm not surprised that the solicitor you spoke to ran a mile from getting involved!

Why not get an appropriate professional expert (https://www.step.org/about-step/public) to give you advice on how you might best achieve your objectives? This won't be new territory to them and you're far more likely to get something workable if you let them advise, based on a full understanding of all the facts.

Disjoint

Keep_pedalling said:

I think there is a high level of paranoia here. Your father should not give his home and security away based on a fear of something that is highly unlikely to happen. 

Please encourage him to make a will and put LPA in place, but don’t suggest he do anything as foolish as giving his main asset away.

"highly unlikely to happen", it's happened once in my wife's family and it's happened once in my family all within two generations. The legal system of this once great nation is not fit to deal with the 21st century and longevity of its population. My FIL is actually agreeable to the idea and is the one who asked me to investigate so as to protect his main home from such a scenario coming back to bite us. He has already taken care of all his other assets, but those are easy to deal with as not a main home.

An LPA is easily revocable and you need it to apply to something concrete. A will is just a will, as worthless as the paper it is written on and annulled as soon as a marriage takes place. I do agree that I might be overcomplicating the solution so will look at simplifying it into another structure, but in all instances he has to separate himself from the asset to minimise the risk of the asset going to another family. I like the trust structure but I don't fully understand all the consequences and how it would be treated in the event of a divorce for example.

Lastly: wishful thinking is not an estate planning strategy... Paranoia at least makes you act.

relishy57

i agree that we must be aware of possible “gold diggers” which can be applicable to both sexes! But what if your FIL met a lovely person, went on to have a loving rewarding relationship with them?  They maybe did not have as many advantages as he has had and he then wanted to make them more secure when he was gone? Life isn’t all about keeping assets safe. 

Disjoint

relishy57 said:

i agree that we must be aware of possible “gold diggers” which can be applicable to both sexes! But what if your FIL met a lovely person, went on to have a loving rewarding relationship with them?  They maybe did not have as many advantages as he has had and he then wanted to make them more secure when he was gone? Life isn’t all about keeping assets safe. 

Agreed - and if my FIL is fortunate enough to find the right person it goes without saying that we will take her in the family and make sure she is taken care of, but this is a choice we would rather make rather than suffer the consequences of poor estate planning and the flat falling into the hands of an unscrupulous individual. 

doodling

Hi,

In the scenario you propose, it is not clear what prevents one of FIL's daughters being swept off their feet by a greedy gold digger who could then subsequently gain a share of the asset and force a sale.

Ultimately there will be someone who ends up owning the property who someone could attempt to manipulate.

I suppose you could create a trust for the purpose of keeping the flat in the family for perpetuity but there are issues with that (notably taxation I think) and any robustness to tampering will create its own issues - what use is an asset that can never be sold (even if no-one wants it)?

Disjoint

doodling said:

Hi,

In the scenario you propose, it is not clear what prevents one of FIL's daughters being swept off their feet by a greedy gold digger who could then subsequently gain a share of the asset and force a sale.

Ultimately there will be someone who ends up owning the property who someone could attempt to manipulate.

I suppose you could create a trust for the purpose of keeping the flat in the family for perpetuity but there are issues with that (notably taxation I think) and any robustness to tampering will create its own issues - what use is an asset that can never be sold (even if no-one wants it)?

Thank you doodling, that's where I was hoping 25% per daughters came in, or even 24.5% and 51% to the trust. This way no one daughter would be able to force a sale? (Could be wrong). Although by the sound of it we might be better off putting 100% in a trust, if it can't be sold in the future it's not such a bad thing either - just income coming out and being distributed accordingly, an enviable position to be in.

Regardless, I'll go to a solicitor in the next couple of weeks that specialises in trusts so that I can get this sorted. I'll have my FIL engage them so that they work with his interest in mind.

MEM62

doodling said:

Hi,

In the scenario you propose, it is not clear what prevents one of FIL's daughters being swept off their feet by a greedy gold digger who could then subsequently gain a share of the asset and force a sale.

Or, even more, likely, one of the owners gets into debt and their creditors come after the property.  The plan potentially has more risks than the one that the OP is trying to prevent.  You are never going to make a balanced decision when driven by paranoia.   

Keep_pedalling

MEM62 said:

doodling said:

Hi,

In the scenario you propose, it is not clear what prevents one of FIL's daughters being swept off their feet by a greedy gold digger who could then subsequently gain a share of the asset and force a sale.

Or, even more, likely, one of the owners gets into debt and their creditors come after the property.  The plan potentially has more risks than the one that the OP is trying to prevent.  You are never going to make a balanced decision when driven by paranoia.   

Going by other threads on this board financial abuse of vulnerable adults is far more likely to come from relatives than strangers. 

Goose_Grass

 He has already taken care of all his other assets, but those are easy to deal with as not a main home.

As this thread has developed, I have become a tad worried for the gentleman's other assets.