Mothers will, discretionary trust and lofe interest trust

Flamingo1705

Malthusian said:

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. 

My father's will was just a mirror will to my mother , doesnt the discretionary Trust only come into effect if she survives him by 30days ? Which woildnt be the case ?
There is no imminent likelihood of him going into care .. and yes he still has half the house I assume ? Mums half is in a life interest trust, he'd has £220K  in savings but wants to gift me £140k, so would be left with his 80k

Malthusian

Flamingo1705 said: 

My father's will was just a mirror will to my mother , doesnt the discretionary Trust only come into effect if she survives him by 30days ? Which woildnt be the case ?

I don't know, I haven't seen his Will (or hers).
But I had gathered from your posts on page 2 that if she had left any assets other than her half of the house (which was left to the life interest trust), they would have gone into the discretionary trust. 
She had no other assets, but your father will - his bank accounts (now in his sole name).

Flamingo1705

Malthusian said:

Flamingo1705 said: 

My father's will was just a mirror will to my mother , doesnt the discretionary Trust only come into effect if she survives him by 30days ? Which woildnt be the case ?

I don't know, I haven't seen his Will (or hers).
But I had gathered from your posts on page 2 that if she had left any assets other than her half of the house (which was left to the life interest trust), they would have gone into the discretionary trust. 
She had no other assets, but your father will - his bank accounts (now in his sole name).

This is what my father's will says

Discretionary nil rate trust
Thic clause shall not take effect unless my wife "mums name " survives me by 30 days.

Keep_pedalling

Flamingo1705 said:

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 )

I am somewhat confused, if they had £220k in joint accounts 50% of that is £110k not £140k.

I think you need to have a word with him about the reality of the care system in this country. Not being able to fund care when you need it means you get it only when you become decrepit enough to get past th3 LA finance panel, and even when that happens your choice of where you receive that care is limited, and this situation is getting worse.

Having said that even if he gifts you £140k then he still has the plenty of assets to fund several years of care so he can’t avoid it and neither should he want too. 

Another thing he might like to think about is limiting the risk of ever having to go into a care home by maintaining sufficient assets that he could fund care at home for as long as possible, and I would want to hold a lot more case than £80,000 to do that. This is something we have done in our long term financial planning and have ringfenced a £150k each for that purpose. 

If it makes him happy to make a gift now I don’t see any problem with it, but for his long term security over 50% of his liquid assets is too high.

Flamingo1705

Keep_pedalling said:

Flamingo1705 said:

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 )

I am somewhat confused, if they had £220k in joint accounts 50% of that is £110k not £140k.

I think you need to have a word with him about the reality of the care system in this country. Not being able to fund care when you need it means you get it only when you become decrepit enough to get past th3 LA finance panel, and even when that happens your choice of where you receive that care is limited, and this situation is getting worse.

Having said that even if he gifts you £140k then he still has the plenty of assets to fund several years of care so he can’t avoid it and neither should he want too. 

Another thing he might like to think about is limiting the risk of ever having to go into a care home by maintaining sufficient assets that he could fund care at home for as long as possible, and I would want to hold a lot more case than £80,000 to do that. This is something we have done in our long term financial planning and have ringfenced a £150k each for that purpose. 

If it makes him happy to make a gift now I don’t see any problem with it, but for his long term security over 50% of his liquid assets is too high.

They were in joint names but each had their own money in them , so my mum's total was 140 .. my dad was a joint account holder but he didn't touch her money as he didn't touch his. That's why he wants to gift her savings to me. So if the way I was explaining got confusing. I think he just wants to avoid my mums hard earned money being spent on his care and I respect him for that , she would have wanted that money to go to me to be used on her grandsons future.
He's not totally trying to avoid care cost, just doesn't want the government touching anything of my mums , she's already lost her state pension as she died 2 months before her first payment. Maybe were looking to far ahead , I'd prefer to just get the Will dealt with first and my father's looked at first incase he needs a new one. And then spend some time grieving .. then discuss gifts and what he wants to do next.
You have been so helpful I really do appreciate it 

Flamingo1705

I do have another question.  As this is all new to me and my family we don't really know what we see doing . As there is no IHT to be payed do I still need to declare my mum's estate to HMRC, is there anything else I need to do ? Just want to make sure I've done everything correctly.

Sarahspangles

Flamingo1705 said:

I do have another question.  As this is all new to me and my family we don't really know what we see doing . As there is no IHT to be payed do I still need to declare my mum's estate to HMRC, is there anything else I need to do ? Just want to make sure I've done everything correctly.

As you are meeting the Will specialist next week I don’t think you need to do anything right now other than possibly put helpful documents into a folder so that you have those to hand.  What you need to submit to HMRC or HMCTS will depend on that advice. It will be easier once at least some of the possible options are closed down.

Keep_pedalling

Flamingo1705 said:

I do have another question.  As this is all new to me and my family we don't really know what we see doing . As there is no IHT to be payed do I still need to declare my mum's estate to HMRC, is there anything else I need to do ? Just want to make sure I've done everything correctly.

You don’t need to do an IHT return or need to declare the estate to them but you will need to register the life interest trust with them within 2 years of her death. This has to be done even though the trust is not a taxable one.

Savvy_Sue

Flamingo1705 said:

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 )

Personally I feel people should worry less about care home fees in general, and more about maintaining choice and autonomy in old age. KP makes a very good suggestion below:

Keep_pedalling said:

I think you need to have a word with him about the reality of the care system in this country. Not being able to fund care when you need it means you get it only when you become decrepit enough to get past th3 LA finance panel, and even when that happens your choice of where you receive that care is limited, and this situation is getting worse.

Having said that even if he gifts you £140k then he still has the plenty of assets to fund several years of care so he can’t avoid it and neither should he want too. 

Another thing he might like to think about is limiting the risk of ever having to go into a care home by maintaining sufficient assets that he could fund care at home for as long as possible, and I would want to hold a lot more case than £80,000 to do that. This is something we have done in our long term financial planning and have ringfenced a £150k each for that purpose. 

If it makes him happy to make a gift now I don’t see any problem with it, but for his long term security over 50% of his liquid assets is too high.

There's also a lot to be said for future-proofing his current home, or taking a long hard look at whether it can be future-proofed. Of course it's not something to rush into, but nor is giving money away if that's going to limit his future choices. 

Keep_pedalling

You are wise to put a suitable period of time to be able to grieve in front of making any rash financial decisions. My father also died before reaching SP age and my mother had another 33 years ahead of her and the same may be true of your father unless he is considerably older than your mother.

I would be very careful about any suggestions the will specialist makes especially if they are not a regulated solicitor. Anything involving new trusts or significant fees should throw up a red flag. Are they suggesting what’s best for your father or for them in the way of fees?