Meaning of 'no land vested...' declaration when submitting probate?

mfn123

I found another old thread asking the same/similar question (https://forums.moneysavingexpert.com/discussion/6263736/probate-declaration-land-vested-in-the-deceased), but didn't understand the answer (at least as it might or might not affect me), so rather than hijack an old thread, I thought I'd try a fresh one   

I'm currently doing the probate for my mother, who died earlier this year. She and my late father owned their retirement cottage property as tenants in common until he died last year. In his will, he bequeathed his share of the property to his children, but granted her the right to live there until she died (in addition to her own tenants in common rights).

I assume this is a fairly common occurrance, but since it is a Life Interest trust, I think I have to account for it when doing the IHT400 paperwork for her, and I hope I've done the right things in terms of filling out IHT404, IHT405, IHT418. In readiness for when I submit it to HMRC and they confirm the IHT421 estate value (zero IHT I hope!), I've now started to fill out the online probate application, and taken it as far as reading the statement of truth. Which is where I get worried ...

The killer statement is "... there was no land vested in [Deceased] which was settled previously to the death (and not by the will) of [Deceased] and which remained settled land notwithstanding such death".

So, in my situation, does the part share of the property previously owned by my father (and inherited by children, subject to the Life Interest trust) count as settled land vested in her?

If so, does it remain settled land notwithstanding her death? Hopefully not, because her death would terminate the trust, but what if there were other trusts involved regarding the children as beneficiaries?

Sadly that is the case because of needless complexity in my fathers will . As I understand it, my sister and I are both sole trustees of discretionary trusts that can benefit us and our respective descendants, with half of my fathers bequest given to each (i.e. 25% of the property), but only when my mother dies.

So does the initial settlement to the Life Interest trust end with her death, and two new settlements start, or is it the same settlement carrying on 'notwithstanding her death'

Does that make any sense to anyone? Help ....

mfn123

What, no takers? Given that everyone who submits a probate application must answer the question, I'm surprised/shocked that noone can explain what it means

If you've just been put off by the specifics of my case, then don't worry about that - I would just like to hear from anyone with a explanation of what the question means generally - preferably with an example

Username03725

There’s a good chance that those who know aren’t spending Saturday evening on a forum. Give it a day or so; you’ll get a response. 

Sarahspangles

mfn123 said:

The killer statement is "... there was no land vested in [Deceased] which was settled previously to the death (and not by the will) of [Deceased] and which remained settled land notwithstanding such death".

So, in my situation, does the part share of the property previously owned by my father (and inherited by children, subject to the Life Interest trust) count as settled land vested in her?

I’m sure someone far more knowledgeable will come along.

But I can tell you how we completed this when we applied for probate for MIL’s estate. She had a life interest in FIL’s half of the house which they had owned as tenants in common. When FIL died we got a solicitor to draw up a life interest will trust, although we know formalising the trust in this way isn’t actually mandatory.

When MIL died we approached the same solicitor about doing the conveyancing on sale of the property.  OH asked her if the trust would make this more complicated. She said that the trust had implied that FIL’s half of the house hadn’t belonged either to MIL or to his heirs, it was effectively still part of FIL’s estate. Now that both FIL and MIL had died, the relevant part of FIL’s Will could be executed, and then MIL’s so the heirs would receive their share of the value of, firstly, FIL’s bit of the house and then immediately afterwards MIL’s. The Executors could sell the property so long as both Wills had gone through probate.

Now this was a solicitor putting things in layman’s terms for OH and I expect there are all sorts of reasons it’s not a great explanation, but ‘MIL did not own that half of the house’ was the reason we ticked ‘no land vested in’ on the application - it wasn’t land she had owned.

p00hsticks

I asked the original question, and the answers and links given were enough to enable me to comfortably answer no, but then in my case the only property involved was owned outright and was to be sold. 

My readings at the time suggested that in general this question was aimed at those sort of landed estates which pass down to the eldest son or whatever in trust for generations. But I wouldn't like to say if it also covers cases like the OP's 

Keep_pedalling

On the paper version of PA 1P it actually says the following “It is rare for estates to be subject to the provisions of the Settled Land Act 1925 but if you know this applies or have any queries please seek legal advice.”

Immediate post death interest trusts are certainly not rare and it is my understanding that they are not covered by the act. These sort of trusts have special tax treatments, in-that at the time of your father’s death, for IHT purposes, his share of the house was covered by spousal exemption and your mother became the beneficial owner so it forms part of her estate for IHT purposes but not inheritable ones.

The IPDIT ends on her death but you seem to be saying that rather than his share passing to you, it goes into a discretionary trust which is unusual and this is something you definitely need professional advice on.

Sarahspangles

Keep_pedalling said:

The IPDIT ends on her death but you seem to be saying that rather than his share passing to you, it goes into a discretionary trust which is unusual and this is something you definitely need professional advice on.

I missed that bit - it does look more complicated if it’s not inherited ‘outright’.

mfn123

Keep_pedalling said:

The IPDIT ends on her death but you seem to be saying that rather than his share passing to you, it goes into a discretionary trust which is unusual and this is something you definitely need professional advice on.

Yes that was the bit I was worried about. My guess is that its only an issue if the discretionary trustees and beneficiaries are different to the executors seeking probate for her assets.
As per the advice that SarahSpangles was given when selling, I think the part beneficially owned by my father would pass to the 2xDTs immediately on my mothers death, and as trustees we could collapse them by appointing the assets to ourselves as beneficiaries, at which point all 3 trusts have gone, removing the issue. I hope ....
But you're right, we should get professional advice

Thanks to all for your helpful comments - including the polite reminder that some people actually have lives and don't spend their Saturday evenings glued to their screens  - sorry for the impatience!

Keep_pedalling

mfn123 said:

Keep_pedalling said:

The IPDIT ends on her death but you seem to be saying that rather than his share passing to you, it goes into a discretionary trust which is unusual and this is something you definitely need professional advice on.

Yes that was the bit I was worried about. My guess is that its only an issue if the discretionary trustees and beneficiaries are different to the executors seeking probate for her assets.
As per the advice that SarahSpangles was given when selling, I think the part beneficially owned by my father would pass to the 2xDTs immediately on my mothers death, and as trustees we could collapse them by appointing the assets to ourselves as beneficiaries, at which point all 3 trusts have gone, removing the issue. I hope ....
But you're right, we should get professional advice

Thanks to all for your helpful comments - including the polite reminder that some people actually have lives and don't spend their Saturday evenings glued to their screens  - sorry for the impatience!

Hopefully as you say you will be immediately be rid of the DTs by distributing the assets but it would be safest to get expert advice on how to go about this. Good luck.

Sarahspangles

p00hsticks said:

I asked the original question, and the answers and links given were enough to enable me to comfortably answer no, but then in my case the only property involved was owned outright and was to be sold. 

My readings at the time suggested that in general this question was aimed at those sort of landed estates which pass down to the eldest son or whatever in trust for generations. But I wouldn't like to say if it also covers cases like the OP's 

Yes when I looked at it it seemed to describing the dreaded ‘entail’ that’s a plot device in so many Austen and Heyer novels! I do know a family that has complicated trust arrangements some of which have been running for over two hundred years - but if you’ve got one of these, I expect you know about it.

Gilessmummy

I just need to know what the phrase actually means. .. does it mean the house isn’t in trust .