Life Interest in Property Trust

jojebe

I am one of the Executors of my late Aunt's Will. The Will contains a Trust leaving my Uncle a life interest in their home (Life Interest in Property Trust). Following his death it passes to myself and my cousins and my Uncle's sons from his first marriage. I have applied for Probate to deal with my Aunt's financial assets, but am out of my depth when it comes to dealing with the Trust. The company who drew up my Aunt and Uncle's Wills (a Will Writing Company, not Solicitors) have told me that the Trust needs Formalisation, followed by Registration with HMRC. For the Formalisation they are quoting £1000, plus VAT, plus disbursement to HM Land Registry, and for the Registration £800 plus VAT. There is plenty of information online about setting up Trusts in Wills, but I'm unable to find out what happens once they need enacting. I'm hoping someone can tell me if is what needs to happen now and if the fees sound fair. 

Sarahspangles

I believe you don’t need to do anything, though the Will Writing Company would like you to. There’s certainly no point rushing if your uncle is also frail.

boingy

Depending how the will is worded you may have no choice in what needs to happen to the trust. You don't have to use the will writers so definitely seek quotes from a solicitor or two but you may well find that £1000 is the cheapest option (assuming you trust the will writers). £800 for registering with HMRC is on the steep side if there is only one trust. I've recently been quoted about that figure for registering three trusts, which still feels like a lot but that's solicitors for you!

RAS

Please don't do anything urgently.

Can you explain why you are seeking probate if the house is going into a life interest trust? Did you aunt have a lot of shares and other assets that require probate? Or very high amounts of savings in sole accounts?

Sarahspangles

After FIL passed away OH did use our solicitor to set up a will trust and notify the Land Registry, and including disbursements it cost about half what you’ve been quoted. The law changed while that was underway, he was about to ask them to register it with HMRC - again at about half the cost - when MIL passed away and the trust ended.

OH did need probate for FIL’s estate and we did this ourselves, but the will trust justified using a professional. The solicitor was upfront that formalising the will trust was optional. OH thought it was a good idea, because if MIL had lived on for a long time it would be better to have it ‘official’.

doodling

Hi,

If it is a simple immediate post death interest trust then registering it with the HMRC takes about 30 minutes online.  Charging £80 would be a rip-off, let alone £800.

HobgoblinBT

When my mother passed away in 2015, her will set up a similar trust to that described above.  We have not made any changes to the ownership with HM Land Registry.  All we have done is to “formalise” the trust by registering it with HMRC.  Any revision will eventually involve my late mother’s death certificate and/or grant of probate.  

Search online for UKgov trusts and taxes (U.K. gov websites only) which tells you what to do in easy to understand terms.  

You don’t need to go via a 3rd party to register the trust unless you want to pay a fee for someone to do it for you.  It really is straight forward.  

You will need to use a Solicitor when the life interest part of the trust ends (the 2nd owner dies) and you sell or transfer ownership of the property at that time.

Keep_pedalling

You don’t need to pay them to do anything. You can register the trust with HMRC yourself at no cost, but there is no hurry to do this. It has to be done within 2 years of her death, but if he dies before the 2 years are up it does not need to be registered at all.

jojebe

Thank you all so much for your input and advice. It's been very helpful.

RAS said:

Please don't do anything urgently.

Can you explain why you are seeking probate if the house is going into a life interest trust? Did you aunt have a lot of shares and other assets that require probate? Or very high amounts of savings in sole accounts?

My Aunt had share Isa's and premium bonds in her sole name which required Probate. I was fairly confident applying for that myself as I did it for my own parents estates. It was knowing that applying for Probate costs only a few hundred pounds that alerted me to the fact that maybe the Will Writers were overcharging for their work - the original quote, including Probate, was £3,300 plus Vat, plus disbusements.

The one thing that bothers me is that, if I don't have the trust formalised, what would be the situation if my Uncle needed to go into a Care Home - is my Aunt's portion of the property protected by the intention in her Will, or could that be ignored if not legally set up?

I will certaily take my time over this and at least chat to a few Solicitors about the necessity of formalisation and their fees. I'll also look into the possibility of registering the Trust myself.

Thanks once again for your help.

Keep_pedalling

jojebe said:

Thank you all so much for your input and advice. It's been very helpful.

RAS said:

Please don't do anything urgently.

Can you explain why you are seeking probate if the house is going into a life interest trust? Did you aunt have a lot of shares and other assets that require probate? Or very high amounts of savings in sole accounts?

My Aunt had share Isa's and premium bonds in her sole name which required Probate. I was fairly confident applying for that myself as I did it for my own parents estates. It was knowing that applying for Probate costs only a few hundred pounds that alerted me to the fact that maybe the Will Writers were overcharging for their work - the original quote, including Probate, was £3,300 plus Vat, plus disbusements.

The one thing that bothers me is that, if I don't have the trust formalised, what would be the situation if my Uncle needed to go into a Care Home - is my Aunt's portion of the property protected by the intention in her Will, or could that be ignored if not legally set up?

I will certaily take my time over this and at least chat to a few Solicitors about the necessity of formalisation and their fees. I'll also look into the possibility of registering the Trust myself.

Thanks once again for your help.

Yes the will creates the trust and her share is protected. If he needed to go into care then the house could be sold and the trust wound up. His share of the proceeds would go to him and your aunt’s share distributed to the ultimate beneficiaries (remainder men).

Has your uncle appointed powers of attorney? Life can become very difficult for you if he has not made a financial LPA. For instance if he had to go into care and the house needed to be sold you would be stuck until you had obtained letters deputyship which is an expensive and long winded process.

jojebe

Yes, an LPA was set up at the same time as the Wills were drawn up, so we're covered in that eventuality.