Mothers will, discretionary trust and lofe interest trust

Flamingo1705

Keep_pedalling said:

Flamingo1705 said:

Keep_pedalling said:

Flamingo1705 said:

Flamingo1705 said:

Keep_pedalling said:

Who is the beneficiary of the life interest trust? If it is your father and he owned their house as a tenant in common with your mother the then the original advisor is correct you don’t need probate as far as the house is concerned as you father is the beneficial owner of the entire property until his death. 

It is unusual to see a NRB trust on a modern will as they became fairly redundant on the introduction of the transferable NRB way back in 2007 and it will not save any IHT. It will will however avoid any of her savings being uses to provide care for your father, but she could have simple left her saving to her children without the complication of a discretionary trust.  

Would you advise taking out the discretionary Trust with a deed of variation ?
I'm unsure what I need to do with the life interest trust in regards to running the trust and registering it ?
Thank you for your reply

I'm not sure if the beneficiary is my father, he is the life tenant ? But I assumed the house was held in trust for me?

Your father will be the life tenant, you won’t actually obtain your inheritance until his death. It will form part of his estate for IHT purposes but because it is covered by spousal exemption ( assuming they were married ) it does not impact your mother’s NRB nor does it leave you with a potential CGT liability.

Yes they were married . So if I'm the beneficiary is it right that the will specialist I'm seeing next week is suggesting probate to register and run the life interest trust.
Wow this all makes my head hurt .
Regarding the discretionary Trust I think my father was the beneficiary so I assume he could do a deed of variation to get rid of that ?

As long as they held the property jointly and it was not in your mother’s sole name, probate is not required to deal with the home. Unlike the discretionary trust there is no ongoing work required other than registering the trust with HMRC which has to be done with 2 years of your mother’s death. 

It was a financial advisor set my parents wills up in 2014. 
I've just spoken with the will specialist we are seeing next week , and she didnt realise a minor was involved she has spoken to the solicitor she works with and he has said we could appoint assets out of the trust if needs be ? ( discretionary nil rate trust ) and keep the life interest trust.
The house was held in tenants in common with the life interest trust holding half the house for me I think. I think she is suggesting probate due to the house being tenants in common? 
It's all very confusing for someone like me who has absolutely no idea about any of this.
Would an option be just ignoring the discretionary nil rate trust ? 
I'm so upset things have got so complicated as I know my mum's intentions when setting up the wills were just the best outcome for myself 

Flamingo1705

Malthusian said:

Flamingo1705 said:

I've just had a look at the will and the discretionary nil rate trust beneficiaries are my father myself and my 7 year old son ( remoter issue alive atmy death ). Does this mean we cannot do a deed of variation

No, as the seven year old cannot consent to that.
Who are the trustees of the trust, and how much discretion are they given on how to distribute funds to the beneficiaries?

Clause 4.2
I give the nil rate sum or property of the same value to my trustees on trust to invest this in such a manner as my will allows and to hold these investments (the discretionary fund) and its income for the benefit of any of rhe beneficiaries as my trustees may in their discretion appoint by deed during the trust period with the right to make any such appointment revocable within thus period .

Is this helpful ?

Flamingo1705

Malthusian said:

Flamingo1705 said:

I've just had a look at the will and the discretionary nil rate trust beneficiaries are my father myself and my 7 year old son ( remoter issue alive atmy death ). Does this mean we cannot do a deed of variation

No, as the seven year old cannot consent to that.
Who are the trustees of the trust, and how much discretion are they given on how to distribute funds to the beneficiaries?

2.2 the  expression "my trustees" means my personal representatives and the trustees of this will and of any trust that might arise under it

Flamingo1705

One thing I'm  now confused with . If my mother's will contains both trusts , discretionary nil rate band trust and a life interest trust ,what's actually in the discretionary Trust..  as all bank accounts were joint and are now in my dads name , he owns half of the house and my mums half is in the life interest trust. So what's actually going into the discretionary Trust as there's nothing else 

Keep_pedalling

Flamingo1705 said:

One thing I'm  now confused with . If my mother's will contains both trusts , discretionary nil rate band trust and a life interest trust ,what's actually in the discretionary Trust..  as all bank accounts were joint and are now in my dads name , he owns half of the house and my mums half is in the life interest trust. So what's actually going into the discretionary Trust as there's nothing else 

With no other sole assets the bequest for the DT fails and your life becomes much simpler. The person who drew up your mother’s will obviously never got a basic understanding of your parents finanancial arrangements so drew up a will with an inappropriate clause regarding the DT. Not only was it not really appropriate there were no assets available to create the trust.

Personally I would be thrilled at that outcome, I just hope they were not charged a large fat fee to do this.

if your father had his will drawn up by the same person then he really should consider making a new one, this time by a local solicitor. 

Flamingo1705

Keep_pedalling said:

Flamingo1705 said:

One thing I'm  now confused with . If my mother's will contains both trusts , discretionary nil rate band trust and a life interest trust ,what's actually in the discretionary Trust..  as all bank accounts were joint and are now in my dads name , he owns half of the house and my mums half is in the life interest trust. So what's actually going into the discretionary Trust as there's nothing else 

With no other sole assets the bequest for the DT fails and your life becomes much simpler. The person who drew up your mother’s will obviously never got a basic understanding of your parents finanancial arrangements so drew up a will with an inappropriate clause regarding the DT. Not only was it not really appropriate there were no assets available to create the trust.

Personally I would be thrilled at that outcome, I just hope they were not charged a large fat fee to do this.

if your father had his will drawn up by the same person then he really should consider making a new one, this time by a local solicitor. 

Yes I'm sure they did pay quite alot 😖😖. So do I need to do anything with the discretionary Trust ? Can it just stay in my mother's will and be ignored ?  With regards to my father's will, doesn't the discretionary Trust only come into effect on the first death ? .
Thank you you've been really helpful

Flamingo1705

One think I have worked out looking through my mother's paperwork, she made her original will with the financial advisor in 2014 which included the discretionary nil rate trust. She then changed her will in 2018 , but rather going through the financial advisor,  she went through the will  company..who the financial advisor must use tondraft the will maybe ? . At that point the life interest was drawn up into the will . So the impression I get was the financial advisor put the discretionary Trust in to protect from care home fees which were my mum's wishes,  but for some strange reason my mother then wanted the life interest trust put it but wasn't advised properly by the second advisor.


I do have another question for you , my mum's savings were in a joint account(but only hers, the same in regards to my father's joint sccount ),but my father would really like to gift the money to me as its what my mum would have wanted but didn't get round to do in the last year due to health . Is he able to do that ? Are their any consequences ? 7 year rule ? Local authority accusing of deprivstioof assets if he does need to go into a home. It's about 140k 
Thanks in advance,  so glad to find a place I can ask these questions

RAS

How much are dad's assets worth if he needs care? In some places it cost £35-40 k a year, other places half that. Expect that to increase.

If dad can fund say 10 years without needing mum's savings no real issue.  If the savings would be half his estate......

Malthusian

Flamingo1705 said:

It was a financial advisor set my parents wills up in 2014. 

That's concerning. Financial advisers do not usually set up Wills because it is dabbling in matters beyond their ken. It is a solicitor's job. A financial adviser directing you to a solicitor (as he apparently did in 2018) would be more normal.

So do I need to do anything with the discretionary Trust ? Can it just stay in my mother's will and be ignored ?  With regards to my father's will, doesn't the discretionary Trust only come into effect on the first death ? .

There is no discretionary trust at the moment, there was nothing to leave to it and the bequest of nothing fails. 

As for the second question, you need to look at your father's Will, because it depends on what it says. If he has left his residual estate to a discretionary trust, and, unlike your mum, he actually has a residual estate, then the executors will have to sort that out at the time. As others have said, it sounds like he should make a new Will with a solicitor.

I do have another question for you , my mum's savings were in a joint account(but only hers, the same in regards to my father's joint sccount ),but my father would really like to gift the money to me as its what my mum would have wanted but didn't get round to do in the last year due to health . Is he able to do that ? Are their any consequences ? 7 year rule ? Local authority accusing of deprivstioof assets if he does need to go into a home.

It sounds like the estate is already below the Inheritance Tax threshold so the "7 year rule" is irrelevant. Two spouses + no NRB used so far + house worth £350k which will be left to direct descendant = total nil rate bands of £1 million.

Being able to afford care is a more relevant issue. Is there any imminent likelihood of his going into care? 
If he does go into long term care, he will still have £80k in savings (?) plus half the value of the home to pay for it. 

Flamingo1705

RAS said:

How much are dad's assets worth if he needs care? In some places it cost £35-40 k a year, other places half that. Expect that to increase.

If dad can fund say 10 years without needing mum's savings no real issue.  If the savings would be half his estate......

My dad currently has half the house , as the other half is in a life interest trust , so around 175 K , then in savings he has 220 K, as my mum's 140 K passed to him as they both had joint accounts but used them separately ( hope I'm explaining right). He wishes to gift me the 140 K so that he's only left with half the house and his 80 grand (basically wants to avoid care home fees even more than just the house being in trust )