Property in family trust 6 March at 1:54PM in Deaths, funerals & probate 2 replies 350 views

miasota

My late mothers property was placed in a family trust about 6 years ago.
Now that she has passed I need to apply for probate, as part of that process I am completing the inheritance tax checker form.
I am assuming that I say that my mother did not own a property?
But do I declare the value of the property as being passed on to me, I am the only child/beneficiary but also the named person on the family trust?

Hope this makes sense

Thanks for any help

Keep_pedalling

This is probably going to work out to be a poor move. You are correct in that she has no house to do lair, but it will need to be declared on IHT 403  as a gift with reservation of benefit. As the transfer occurred before the introduction of the residential nil rate band you will not be able to claim that exemption if her estate (including the value of the house) exceeds her NRB.

You may also find you have a capital gains tax liability when winding up the trust. I think you really need to take professional advice to avoid getting this wrong.

Marcon

miasota said:

My late mothers property was placed in a family trust about 6 years ago.
Now that she has passed I need to apply for probate, as part of that process I am completing the inheritance tax checker form.
I am assuming that I say that my mother did not own a property?
But do I declare the value of the property as being passed on to me, I am the only child/beneficiary but also the named person on the family trust?

Hope this makes sense

Thanks for any help

Condolences on the loss of your mother.

Possibly this was the old chestnut of setting up a trust to try and avoid care home fees - but as KP points out, there's a sting in the tail (and if care home fee avoidance was the original intent, that almost certainly would have failed and been viewed as deliberate deprivation of assets - a point included for anyone else reading this thread who might be contemplating a similar move).

As KP suggests, please take professional advice - not least to see if you have any claim for poor advice in respect of the reasons underlying the establishment of the trust, if it leads to your paying more tax than would otherwise have been the case.

I may be entirely wrong in what I've said, which is pure speculation about the underlying reasons for setting up the trust, in which case many apologies.