Probate & Discretionary Trust - where do I start?

pootleflump

My mother has passed away leaving her home in a trust to my brother and me. We haven't worked out her cash assets yet, but they're between £150-£200k.

It seems using a solicitor for probate is really expensive; should I apply for that myself since it's under the IHT threshold?

I have no idea where to start with the trust - do I just contact the company who put the trust together? 

Her home is currently rented out as it was helping to pay for her care home fees, and the rent goes into her bank account. Does future rental income now belong to my brother and me, or does this only start once a solicitor has settled the trust? My brother asked whether we should be changing the bank account it's paid into from mum's to ours.

We really have no idea where to start with all of this so any advice is much appreciated.

greyteam1959

Seek professional advice.
Far too complex for you to sort out.

Keep_pedalling

What was the reasoning to leaving the home in a discretionary trust? They are a pain to manage and are subject to pretty hefty taxation, so unless there is a good reason to keep it in trust I would be looking at winding it up and distributing the assets between you and your sibling.

pootleflump

Keep_pedalling said:

What was the reasoning to leaving the home in a discretionary trust? They are a pain to manage and are subject to pretty hefty taxation, so unless there is a good reason to keep it in trust I would be looking at winding it up and distributing the assets between you and your sibling.

I'm not really sure - I assume she was advised to do it at some point to avoid inheritance tax. At what point are they subject to heavy taxation please?

Keep_pedalling

pootleflump said:

Keep_pedalling said:

What was the reasoning to leaving the home in a discretionary trust? They are a pain to manage and are subject to pretty hefty taxation, so unless there is a good reason to keep it in trust I would be looking at winding it up and distributing the assets between you and your sibling.

I'm not really sure - I assume she was advised to do it at some point to avoid inheritance tax. At what point are they subject to heavy taxation please?

Leaving an asset in a discretionary trust does not help with IHT and DT income is taxed at 45%. 

Just for clarification was the house put into thrust while she was alive or does the will create the trust?

pootleflump

It was put into trust whilst she was alive. I've just run a Land Registry check and my brother and I are the registered owners of the property.

pootleflump

Keep_pedalling said:

pootleflump said:

Keep_pedalling said:

What was the reasoning to leaving the home in a discretionary trust? They are a pain to manage and are subject to pretty hefty taxation, so unless there is a good reason to keep it in trust I would be looking at winding it up and distributing the assets between you and your sibling.

I'm not really sure - I assume she was advised to do it at some point to avoid inheritance tax. At what point are they subject to heavy taxation please?

Leaving an asset in a discretionary trust does not help with IHT and DT income is taxed at 45%. 

Just for clarification was the house put into thrust while she was alive or does the will create the trust?

I can't understand how it doesn't help with IHT - if we're now the owners then it doesn't form part of her will, surely?

Keep_pedalling

pootleflump said:

It was put into trust whilst she was alive. I've just run a Land Registry check and my brother and I are the registered owners of the property.

Sounds like this was one of those trusts sold by a slimy salesman to protect a home from care costs or IHT, but the only person who benefits is the salesman who charges hefty fees for doing it. Despite the transfer the property still forms part of her estate for IHT purposes, and if the transfer happened before April 2017, then her estate won’t be able to claim the residential NRB. 

Sale of the house will also be subject to CGT on any increase in value since it was transferred.

I am however puzzled by the fact that the house has been put in you and your siblings name rather than the trust. 

pootleflump

I honestly have no idea! I'll update when I get a clearer picture...

Keep_pedalling

Sorry one more question, who was paying the income tax on the rental income? 

pootleflump

Mum was paying the income tax.