Trust will

Geraldsprawnsandwich

My parents have a trust will in place whereby when one of them passes  50% of their house passes to me in a trust. My question is how does this actually work. Could my surviving parent sell the house and effectively wind up the trust or does the trust stay active until both parents pass away? Thank you in advance.

msb1234

It depends on the actual wording. My mum and stepdad had such wills. According to the will, he can stay in the house until he ‘begins a relationship with another woman’. The problem with this is that he’s now in a care home, doesn’t have capacity (officially) and the house can’t be sold under the terms of the will trust and because he doesn’t have capacity. It’s an absolute nightmare!

Geraldsprawnsandwich

So sorry to hear that. I’ll take a look at the wording. Anything In particular I should look out for? Many thanks

Keep_pedalling

Assuming the will sets up an immediate post death life trust then the surviving spouse this would give the right for the survivor to live in the property for life. They would not be able to wind the trust up but usually the terms would allow a sale to downsize. If the house had to be sold for the survivor to receive residential care then the capital from the trust’s share could remain in trust with the survivor benefiting from the interest.

Sarahspangles

Geraldsprawnsandwich said:

Could my surviving parent sell the house and effectively wind up the trust or does the trust stay active until both parents pass away?

It depends on the wording of the Will.  We are in the process of administering the mirror wills of elderly parents.  The intention of the parents was that when the first spouse died, the beneficiaries would get a ‘deferred’ bequest but while the surviving spouse lived, they would have the right to continue to live in the house.  They could even buy a new house using the value of the half that had been bequeathed.  This would have enabled downsizing, or moving closer to family.  The Trust created by the Will meant that Land Registry records had to be changed, and we were on the point of registering the Trust (which is now a legal requirement) when the second parent died.  So if the paperwork is done correctly, the beneficiaries’ interests are protected.

Land_Registry

The detail will be in the will/trust itself so that needs to be read carefully to understand how the 50% share is created and when it can be realised. 

The key thing from a registration perspective, the 50% share is in the beneficial ownership. We register the legal ownership so in answer to your specific Q you need to split it into two. 

‘could the surviving owner sell the house.’ - yes but the 50% share in the beneficial ownership still exists re 50% of the sale monies for example. So ‘on sale is the trust effectively wound up?’ - the answer is no. 

When such arrangements are made many joint owners will register a form A restriction on the land register to indicate such a trust exists and to protect the beneficial interests. See joint property ownership for details 
https://www.gov.uk/joint-property-ownership

Geraldsprawnsandwich

Thank you for the helpful advice. So Parent 1 passes trust owns 50% of house plus parent 2 owns the other 50%.
could the house be sold in order to downsize for parent 2? Could the new house be purchased 100% by the trust? Ie original house worth 800k trust owns 400k parent 2 owns 400k new house worth £400k? Many thanks all.

Land_Registry

Geraldsprawnsandwich said:

Thank you for the helpful advice. So Parent 1 passes trust owns 50% of house plus parent 2 owns the other 50%.
could the house be sold in order to downsize for parent 2? Could the new house be purchased 100% by the trust? Ie original house worth 800k trust owns 400k parent 2 owns 400k new house worth £400k? Many thanks all.

A trust is a trust and selling the property doesn’t change that. Selling the property converts it into something you can then split, namely pounds and pence. 

The trust is in respect of the beneficial ownerships. The legal ownership can only be dealt with as a whole so when sold you convert it into money. Money can be split 50/50 for example and represents the beneficial ownership. So if the beneficiaries all agree then it may not be a problem 
The key is the wording of the trust alongside the beneficial interests and how they want things to play out