House in trust now has to be registered with government

wathlass

In 2013 My mum put her house in a trust for my brother and I as solicitor said this would avoid having to sell for care home fees. The solicitors are now requesting £500 to complete a form to register this trust as the law now required all trusts to be registered.

Not sure whether to complete the form or whether the solicitors original advice us still valid.

Albermarle

as solicitor said this would avoid having to sell for care home fees.

If the local authority suspect that the home was put in trust to avoid care fees, then this would be seen as deliberate deprivation of assets. In which case your Mum will have to pay the care home fees anyway . Plus the solicitor fees and the fees for running the trust .

I suggest you discuss this with your solicitor.

Linton

If Mum lives there rent-free could this give rise to potential IHT problems?  Also is there CGT to pay once the house is sold?

Freecall

Welcome to the forum.

The bit that caught my attention was when you said :

wathlass said:

......... solicitor said this would avoid having to sell for care home fees. 

I suspect that the advice was to put assets in trust as there are perfectly good reasons for doing so but that you (or your Mother) interpreted the reason incorrectly.

As already mentioned, you cannot use this to avoid care home fees.  If it could then there would be a long queue at solicitor's offices.

DairyQueen

Ouch!

Not to mention that mum's house is now under the control of the trustees (i.e. representatives of the trust company). This forum offers plenty of examples of how this 'tactic' to 'avoid care fees' creates a nightmare of problems.

borders

My friend was quoted £180 by their solicitor. It may be that more complicated trust arrangements incur a higher solicitor's fee. You can do it yourself but I have no idea what's involved. 

eskbanker

wathlass said:

In 2013 My mum put her house in a trust for my brother and I as solicitor said this would avoid having to sell for care home fees. The solicitors are now requesting £500 to complete a form to register this trust as the law now required all trusts to be registered.

Not sure whether to complete the form or whether the solicitors original advice us still valid.

Is there an audit trail of correspondence with this solicitor regarding this advice?  As above, it's unlikely to be the solution hoped for and in the event of issues further downstream, having a record of flawed advice could assist with a future claim against the solicitor....

Reaper

I had to do it for a Bare Trust. It was pretty simple. Maybe it's more complicated when property is involved but £500 sounds excessive.

Keep_pedalling

The solicitor’s advice is as valid as it was the day he suggested the idea and no doubt charged a big fat fee for setting up the trust. It wasn’t valid then and it is not now, this is clearly a case of deliberate deprivation of assets, which it likely to fail Its purpose should she ever need care, and it has created issues in the form of CGT and possibly IHT as well.

As you mother still lives in the house this is regarded as a gift with reservation so the house will counted as part of her estate for IHT purposes and as the transfer occurred before the introduction of the residential NRB her estate will have lost the ability to claim that exemption. This means if she is a widow her estate will pay IHT if it is in excess of £650k instead of £1M and if she is single / divorced £325k instead of £500k.

Are these ‘solicitors’ also the trustees? 

Freecall

Keep_pedalling said:

Are these ‘solicitors’ also the trustees? 

The OP hasn't come back but it would be scandalous if that were the case.

dunstonh

Freecall said:

Keep_pedalling said:

Are these ‘solicitors’ also the trustees? 

The OP hasn't come back but it would be scandalous if that were the case.

Happens quite often.   

Most of the ones I see are not put in place by solicitors but by unregulated firms using names that suggest legal connections but not actually regulated.   One case I saw had the solicitor of a firm pass it to her husband, who didn't work for the solicitor firm, but was someone who did this sort of work.  He was not qualified or regulated.   And they named themselves as the executor and trustees.   They were charging 3% of the estate to be the executor.   They also charged £1000 (or their tariff rate) a year for being a trustee once it was activated.