Updating property title for part-share ownership

mfn123

Hello
This is my first posting, but I have searched these forums before and found very useful information and advice, so am optimistic someone can help explain this to me.
My query is about the need to update the land registry title for my parents property in light of my fathers recent death and the instructions in his will.

My parents downsized about 10 years ago, buying a leasehold cottage in a sheltered housing complex as tenants in common.
My father's will has a clause about his share in the property that creates a life interest trust so that my mother can remain in the property.

The share would be split 50/50 between my sister and I (and our descendants) on my mothers death via discretionary trusts with us as respective sole trustees.

I believe this arrangement was set up so that the property went to bloodline eventually, but seems a bit complex and sadly it interferes with IHT RNRB relief.

My mother's will has now been simplified to give her share of the property to my sister and I directly when she eventually dies, which means she should get RNRB on that.

The land registry entry currently names both my parents as proprietors, and has a Form A restriction (presumably because of it being held as Tenants in Common)

How should this be updated in future? I anticipate the following events

• Probate is granted on my fathers estate. Do we change the proprietor to become just my mother, or my mother (because of her own share) AND the life interest trust (for my fathers share), or even my mother AND each of the discretionary trusts (do these even exist yet??)
• My mother eventually dies and probate is granted on her estate. At that point, the beneficial ownership would become 25% each for my sister and I (from my mothers share), and 25% each for our respective trusts (from my fathers share). How should that be reflected on the title?
• The property is finally sold to a third party. I assume it all straightens out as part of that conveyancing - can we defer the title changes until then, or must they be done correctly at each previous stage?

Hope that makes sense. Thanks for any insight people can provide.

SeniorSam

First question is in relation to the Sheltered Housing lease. You will need to check the terms of the leasehold, as ownership in such housing complexes is not the same, because there may be age restrictions. In addition, there may be restrictive clauses in relation to Trusts, which may not be allowed to register as owners.

This is something that your solicitors should have checked on and given advice about when the property was purchased, so probably best to seek their advice initially.

Other than that, normally the ownership changes in the land Registry would be half in your mothers name and the other in the name of the Trustees.

Again, do check on your Mothers Will and the terms of the lease in the sheltered housing development, as ownership may be restricted to age.

mfn123

Thanks - those are both good points, so I checked the lease. I could find no mention of restrictions for trusts, but there is an age requirement: 

Not at any time to occupy the Demised Premises nor permit the same to be occupied unless the person so occupying is (i) over the age of sixty years at the date of commencement of such occupation and (ii) is either the Lessee or a member of the Lessee’s immediate family and in this connection the Lessor shall be entitled to call for evidence as to the age or ages of the Lessee or the qualifying member of the Lessee’s family Provided Always that the Demised Premises may be occupied by the spouse of either the Lessee or of the qualifying member of the Lessee's family and in such event the spouse may be under the age of sixty years

I take this to mean that ownership is not age-restricted, only occupancy. So the property could be owned by a descendant or trust(s) and it would be OK as long as the occupant (my mother in this case) is over 60. Both my sister and I are also over 60, so we should be covered as well. My only slight doubt is whether a trust as (part) Lessee can be described as 'immediate family' - I would have thought so provided the trustee is, but in any case, if my mother is a part Lessee, she would be a valid occupant in her own right. I will check with the Lessor in case they see it differently. Could take a while though ...

Re the actual registry changes, are you saying the trusts (life interest and discretionary) would need to be included at each stage. If so, how should they be named to avoid ambiguity - by careful reference to my father's Will? Could be quite a long proprietor name!

What forms would be used to request the change - TP1? AP1? I don't know anything about this, so are there any simple guides I could read, or would you advise using a conveyancing solicitor to avoid messing up?

p00hsticks

Hi mfn123

Welcome to the forum

FYI, there is a long running thread over on the  House Buying, Selling and Renting board, where you can post questions directly to a very helpful Land Registry representative for them to answer

https://forums.moneysavingexpert.com/discussion/5685941/land-registry-questions#latest

Also be aware that, going by other recent threads on this board, I have a feeling that there may also be a need to register the trust with HMRC, but I'm afraid l don't know the technicalities behind this....

NorthYorkie

I think you really need to speak to the solicitors who drew up these wills, they should be able to answer all these points.

mfn123

p00hsticks said:

Hi mfn123

Welcome to the forum

FYI, there is a long running thread over on the  House Buying, Selling and Renting board, where you can post questions directly to a very helpful Land Registry representative for them to answer

https://forums.moneysavingexpert.com/discussion/5685941/land-registry-questions#latest

Also be aware that, going by other recent threads on this board, I have a feeling that there may also be a need to register the trust with HMRC, but I'm afraid l don't know the technicalities behind this....

Thanks - I'd forgotten about the Land Registry thread - I should have posted there and will do so now :-)

Having said that, the comments received here about the will itself have been very valuable too - not least your comment about registering trusts with HMRC! I had assumed that was only necessary ifthe trust had generated some taxable income or gain (i.e. not a problem just yet), but having checked the new rules, it seems pretty much ALL trusts need to be registered as of Sep 2022.

Ouch ...

There seems to be an exclusion for will trusts in administration (otherwise every single will would need to be registered for no good reason), so the basic will trust should be OK, but the Life Interest trust will need to be registered as soon as we have probate. I *hope* the discretionary trusts only need to be registered when they become active on my mothers eventual death, but I could well be wrong. My understanding is based on an example similar to mine under the HMRC guidance at

www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm23020

Alice and Bob own a property with a declaration of trust confirming they own as tenants in common. This trust is excluded from registration during Alice’s lifetime as an exempt co-ownership trust (see TRSM23050).

Alice dies and by the terms of her will leaves her share of the property on trust to Bob to occupy for the remainder of his life; and thereafter to her daughter Clara. Alice’s son David is appointed as executor and trustee of the will and also appointed as a second trustee of the property with Bob.

There are two trusts: 1) the new trust created by Alice’s will; and 2) the ongoing trust of the property.

1. The trust created by Alice’s will is excluded from the requirement to register for two years following Alice’s death. If the trust is still in existence two years after Alice’s death, the trust is required to register from that point.

2. The ongoing trust of the property is no longer an exempt co-ownership trust as the trustees and beneficiaries are not the same persons – see TRSM23050. Registration is required 90 days after Alice’s death.

If Clara were appointed as the second trustee of the property instead of David, then this would still be an exempt co-ownership trust as the trustees and beneficiaries would be the same persons, and therefore registration would not be required.

Does that make sense? Anyone able to clarify about the discretionary trusts?

Grrr.. I really do wish these trusts had not been set up, but we are where we are ...

Thanks again

mfn123

NorthYorkie said:

I think you really need to speak to the solicitors who drew up these wills, they should be able to answer all these points.

Yes they should, but sadly I have little confidence in them

It turns the will-writer works for a legal firm that is not SRA-regulated as a whole, but he is 'monitored' by a regulated solicitor in the firm. Not realising this, we asked him about using a Deed of Variation to simplify the will (i.e. get rid of some of the trusts). He said that would be no problem, then promptly referred us to someone else (a 'colleague') who turned out to be in a completely different law firm!

This second solicitor advised against using DoV because of interactions between the Life Interest and Discretionary trusts (something about problems with disinheriting potential beneficiaries). This advice (generously given for free after studying the will) seemed highly plausible, which is why we are trying to make the best of a bad job and use the trusts as intended.

I suppose we could pay a different solicitor to explain the will consequences carefully and give advice on our options, but I suspect it would be money down the pan - our current position does not incur IHT, so the 'only' problem is the administration of the trusts.

What I do envisage is engaging a solicitor to do the conveyancing if Land Registry and lease updates are needed. This might be the solicitor who handled their purchase of the property 10 years ago, because they would be familiar with the leasehold conditions (a risk area highlighted by SeniorSam)

getmore4less

Not read every post but one point.

Life interest trust the life tenant benefit from transferable nil rate bands as long as the remaindermen of the trust qualify as close relatives of the life tenant

mfn123

getmore4less said:

Not read every post but one point.

Life interest trust the life tenant benefit from transferable nil rate bands as long as the remaindermen of the trust qualify as close relatives of the life tenant

Sadly the remaindermen are discretionary trusts rather than named descendants, so the RNRB is lost. However, by revising my mothers will to only benefit named descendants (my sister and I), we at least keep the RNRB on the part of the property held in her own right, and it turns out that 2 x NRB + 1 x RNRB is enough to avoid IHT