Life interest Trust after probate / declaration of trust

DerbyBorn7

Hi a general question about life interest trusts / declaration of trusts.

After probate completed, dads will says property to go into trust, but beneficiary (step mum) gets to stay in house, or sell, with permission from trustee.

The will does not name who the estate goes to when trust 'ends' - but stepmum says verbally that dad owned 70% of property, and the 70% will go to me when they die but they get to live in it / sell / move etc first.

The public property deeds confirm it's partially owned by the 'will trust of (my dad)' and step mum,  but the will doesn't show shares owned, and neither do the deeds. These deeds refer to a declaration of trust made on the property 6 months after the will was made.(which is stated in restriction

The executor / trustee - only has the will. they have never seen the declaration of trust, or even really thought about it (meaning they have been told 70% . verbally, they have seen no documents)



but can someone confirm what 'else' the declaration of trust could potentially show? IE, could there be terms / clauses in there to? (and if I am not named in Will to recieve when the trust 'ends' - where am I named then? As trustee and stepmum both say its me to recieve the 70% when trust ends..


I ask here as my step mum is selling the house and wants to wrap up the trust into new property with her new husband, and the executor / trustee, has never even seen the existing declaration of trust...  so I am curious, can a will not have clauses but a declaration of trust made later, can potentially / is possible to have specific clauses (IE could a remarry means trust ends, clause exist in a declaration of trust but not exist in a will at the same time?

I feel as if the executor / trustee never ever seeing the existing declaration of trust feels a bit worrying, given step mum wants to steam ahead and sell and trustee seems to agree...

RAS

It really does help if you can stick to one thread per forum as you've not given people the link to the earlier thread.

Probate, will and then proposal of new deeds ? — MoneySavingExpert Forum

And you need to quote the section from the will that refers to the property, as a start, or post an image if you are allowed, removing any personal information like names and addresses.

doodling

Hi,

I'll post this here rather than in the House Buying Renting and Selling board where your original post is.

Firstly there will be two documents which feature the word trust.  They are separate to each other and refer to different things.  There is the will, which will define the life interest trust and secondly there will be a "deed of trust" which defines the agreement between your Dad and your step Mum with respect to ownership of the house (e.g. the proportions in which they own it).  These are completely separate documents and refer to entirely different things.

DerbyBorn7 said:

Hi a general question about life interest trusts / declaration of trusts.

After probate completed, dads will says property to go into trust, but beneficiary (step mum) gets to stay in house, or sell, with permission from trustee.

The will does not name who the estate goes to when trust 'ends' - but stepmum says verbally that dad owned 70% of property, and the 70% will go to me when they die but they get to live in it / sell / move etc first.

The will almost certainly does define who the estate goes to when the trust ends but the wording in wills can be unclear.  For a life interest trust then the will should define the beneficiary (your step Mum) and the remaindermen who get the contents of the trust (probably you) when the beneficiary passes away.  It may not however use those words.

The public property deeds confirm it's partially owned by the 'will trust of (my dad)' and step mum,  but the will doesn't show shares owned, and neither do the deeds. These deeds refer to a declaration of trust made on the property 6 months after the will was made.(which is stated in restriction

The executor / trustee - only has the will. they have never seen the declaration of trust, or even really thought about it (meaning they have been told 70% . verbally, they have seen no documents)

That is not normally a problem as usually a deed of trust only specifies the proportions of ownership and sometimes what agreement there is about selling the house in the future (normally only applicable to unmarried couples - if your Dad and step-Mum were married then it probably only contains details of the proportions of ownership as selling the house would be addressed as part of a divorce and any provisions in the deed of trust would be ignored).  In the vast majority of cases the executor / trustee doesn't need to see the deed of trust as the house is never sold before the beneficiary of the life interest trust dies and they only need to be aware of it at that point.

but can someone confirm what 'else' the declaration of trust could potentially show? IE, could there be terms / clauses in there to? (and if I am not named in Will to recieve when the trust 'ends' - where am I named then? As trustee and stepmum both say its me to recieve the 70% when trust ends..

The trust created by the will will detail what happens when the beneficiary (your step Mum) passes away, read it again, or post the exact text here.  The declaration of trust is unlikely to do much more than state the ownership percentages.

I ask here as my step mum is selling the house and wants to wrap up the trust into new property with her new husband, and the executor / trustee, has never even seen the existing declaration of trust...  so I am curious, can a will not have clauses but a declaration of trust made later, can potentially / is possible to have specific clauses (IE could a remarry means trust ends, clause exist in a declaration of trust but not exist in a will at the same time?

I feel as if the executor / trustee never ever seeing the existing declaration of trust feels a bit worrying, given step mum wants to steam ahead and sell and trustee seems to agree...

It is highly likely that the only relevance of the declaration of trust to the life interest trust is that it will state the house ownership percentages.  Declarations of trust can contain more but it is unlikely that it will in this case.  The declaration of trust cannot override the will - in an extremely unusual case a declaration of trust might attempt to vary the ownership percentages depending on whether one of the signatories is alive or not, but I can't think of a reason why anyone in their right mind would put such a thing in a declaration of trust and certainly not in one professionally drawn up.

The important point to take away from this is that the trust is created by the will and that defines the whole trust.  The will will answer your questions as to what happens when your step Mum dies.  The declaration of trust is nothing to do with the life interest trust but will simply define the ownership proportions.

DerbyBorn7

Thank you.

With reference to your comment 'Declarations of trust can contain more but it is unlikely that it will in this case'.

When my dad was alive he told me he had reasons to not trust step mum. He also told me he was putting clause in to ensure remarriage does not allow the continued use of house / trust if he dies.

. So to my surprise the will doesn't state this....so hense my curiosity IF it is possible the declaration of trust can hold a clause. This declaration of trust on the property was set up 2 years before his death.

Thank you 

RAS

You need either to quote the will precisely, as I've previously advised you, or to take it to a good probate lawyer and ask them what it means.

Because what you are feeding into MSE are your interpretations of a document that you do not appear to understand. And without the precise wording, people can't advise you.

The other remote possibility is that dad DIYed this will, rather than using a solicitor?

kazwookie

Go and see a solicitor who deal with this sort of matter.

DerbyBorn7

here is a redacted version of his will,

reading this, clearly no clauses and says when he dies, the estate goes to me.

since his death, SM moved new guy in within 12 weeks, and now new husband (they re marry in Sep) are selling dads home (he verbally owns 60% - but no proof in writing anywhere about that) the below will is all my aunt says she has.

So if this new home has new husband  , my SM, on the deeds, i am not sure what that means for my dads estate here.

the deeds show property is owned by this will trust and SM, so I wondered if any further clauses could exist elsewhere.

Thanks for any help in decyphering this!

1.            as executors and trustees of this my will i appoint my wife ( SM ) of (ADDRESS) my sister ( AUNT )

2.           i give to my wife ( SM ) smith all my personal chattels as defined by section 55 (1) (x) of the administration of estates act 1925 free of all inheritance tax absolutely                                          

3.            (a)        in this clause "the beneficiary"  means my said wife ( SM ) ("the beneficiary")            

(B)               in this clause "the trust period" means the period between my death and the death of the beneficiary ---—---------------------------------—-------------------------—-

(C)               i give free of tax to my trustees my beneficial interest ("my interest") in (or in the future proceeds of sale of} of my property ( ADDRESS)  or any other freehold or leasehold property ("the dwelling") which i may own or co-own as my principal residence at the time of my death

(D)               my trustees shall hold my interest on trust to sell it (with full power to postpone the sale without being liable for loss) and to pay the income from it or from the property which currently represents it to the beneficiary during the trust period ---------------------------------------------------------—------------------------------------------

(E)               during the trust period and subject to the beneficiary’s reasonable compliance with the terms of (f) below my trustees shall not (except with the beneficiary‘s written consent) take any steps to sell or obtain a sale of the dwelling or

to disturb or restrict lhe beneficiary’s occupation of it or to require it to be shared with anyone else or to obtain any rents or profits from it but my trustees shall sell the same (or join with the beneficiary in selling it if jointly owned with them) if the beneficiary makes a written request to that effect              

(F)                the beneficiary (whether or not currently residing in it) shall pay all outgoings in respect of the dwelling (and observe and perform all the covenants and conditions contained in any lease under which it may be held) and keep it in good repair and insured comprehensively and to its full reinstatement value with insurers approved by my trustees and in the joint names of herself and them

(G)               any money held by my trustees under this clause may be invested in

any way permitted by this my will or any codicil hereto and in particular but without prejudice to the generality of the provisions otherwise in this will contained ------

(i)                 in the provision of a residence for the beneficiary or -----------------------—---

(ii)               towards the provision of such a residence and my trustees shall comply with any written and reasonable request made by the beneficiary to exercise their powers to purchase a replacement property and my trustees shall have absolute discretion in deciding whether any property is suitable investment for the trust and what terms (if any) to impose in relation to such property ---—---------------------------------------------------------

(H)               when the trust period ends or if the beneficiary has predeceased me then my trustees shall hold any property then the subject of this clause upon trust as an accretion to the trusts of my residuary estate declared in clause 5 of this will with and subject to the powers and provisions then governing the same --------------------------

(I)                  provided that if at the date of my death there is no property which falls within the definition of the dwelling then for the purposes of this clause there shall be

 

substituted for my interest a cash legacy (free of tax) of an amount equal to the net proceeds of sale of the last freeho(d or leasehold property which i owned and occupied as my residence or my share thereof if the same was co-owned by me and the beneficiary as our principal residence prior to my death ---------------------------------------

(J)               provided also that any property which at the date of my death i have contracted to sell (or otherwise dispose of) shall not fall within the definition of the dwelling but any property which at that date i have contracted to buy (or otherwise acquire) shall do so if no other property does so and i had intended it to be my principal residence and in that case my residuary estate shall make the contribution to the price and costs ol purchase which i should have made if i had lived or (if my trustees cannot establish the extent of that contribution) a contribution bearing the same proportion to the total as my share of the net proceeds of sale of the freehold or leasehold property then most recently owned by me or co-owned by the beneficiary and me as our principal residence bore to the total net proceeds)

4.            if my said wife ( SM ) shall survive me for the period

of twenty-eight days then i give to her absolutely all my real and personal property subject to and after the payment of all my just debts funeral and testamentary expenses any legacies given by this will or any codicil hereto and any inheritance tax payable in respect of my estate (my “residuary estate”) but if my said wife ( SM ) smith shall predecease me or shall not survive me for that period or if the gift to her shall otherwise lapse then the following clauses of this my will shall take effect ------------------—---------------------------------------------------------------------

5.           i give my residuary estate to my trustees upon trust to divide the same into four equal parts and my trustees shall hold them upon the following trusts:-

a)                (i)      as to three such parts for my son ( OP )

(ii) as to one such part to be divided between the children of my said son ( OP)  upon them attaining the age of thirty years as shall survive me and if more than one in equal shares absolutely-------------------------------------------------------------------------------

b)                 provided that if any of the persons named in sub-clause a)(i) and (ii) of this

clause predecease me leaving issue living at my death who attain the age of thirty years then such issue shall take absolutely and if more than one in equal shares through all degrees according to their stocks the part of my residuary estate which would have been taken by such deceased persons but so that no such issue shall take whose parent is alive and so capable of taking ------------------------------------------

6.            i declare that the standard provisions and all of the special provisions of the society of trust and estates practitioners (2nd edition) shall apply --------------------

7.    i desire that my body be cremated ----------------------------------------------------------

in witness whereof i have hereunto set my hand this                 

SIGNED AND DATED.

deeds show several months after this will, the declaration of trust was agreed on their then home.         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RAS

OK, so dad did not restrict her benefit if she remarried.

But he did give the trustees absolute discretion under under G ii) to determine what terms to impose on any new property.

As one of the trustees, she cannot do this without the approval of the other, who is your aunt. No wonder aunt is getting fed up.

DerbyBorn7

Thank you for your observation its really helpful.

With ref to tbe declaration of trust on the property,  which would state the shares ....is there any , any possibility there could be a clause in there? Or is that not possible at all ? Because I don't have sight of it and trustee never has...im curious in case there is a clause that prevents selling (as so say 4 sales have collapsed so far due to the trust allegedly being a nightmare ). 

doodling

Hi,

The trust will become part of the residual estate when the beneficiary dies as detailed in 3(H).  The residual estate goes to you and any children you have (75% to you 25% shared amongst them) as detailed in 5.

As I have said before, it is highly unlikely that the trust deed will contain anything other than details of who owns what proportion of the house.  it is possible that it could contain other things but I really wouldn't worry about it.  It is highly likely that as trustee of the will trust your Aunt could agree changes to the trust deed (other than changing the ownership proportions) if she wanted to so there shouldn't be anything in there which would cause problems.

As a trustee your Aunt has to agree to any sale.  She has the option to agree anything within the terms of the trust but given what is proposed by your step Mum then I would expect that she would take legal advice and it is possible that the advice she has received is to either not permit the sale or to impose terms that your step Mum finds unacceptable.  Or it could simply be an argument over the sale price where your step Mum has agreed a price of x and your Aunt thinks it is worth more than x.  Why not simply ask your Aunt or your step Mum what the problem is, noting that they don't have to tell you so be polite?

Ultimately, the trust could take part share in a property also owned by your Step Mum and her new partner if the trustees agreed.  No-one here will be able to guess why the trustees can't agree.

Note that if you have children and they are under 30 then there will be another trust to deal with when your step Mum dies.  Presumably you would volunteer to be the trustee for that.

DerbyBorn7

Thank you - that is really helpful. I have asked my aunt, she says she's too old and wants nothing to do with it anymore... it's all too much apparently... and I am told she wants to hand it to me... i'm not sure what 'handing it to me' means though, 

for a trustee to pass the control to a new trustee, do solicitors have to be part of that transaction?