Making a will & putting house in trust - but diff reason fetched to light

Spendless

Asking on behalf of a friend.

Friend's retired parents are in the process of making their will. Friend has a sibling who is estranged. Parents are making will in favour of her and their grandchildren (and not their estranged other child).

During the solicitors appt it was fetched up about how the parents could put their home in trust - usual story of telling them it avoided care home fees.

Friend wasn't happy with parents suggestion and pointed out DoA, being put in a care home that isn't great and also administering this trust especially if she'd elderly herself at the point her parents pass.

Friend's Mum has now told friend it's nothing to do with care home fees why she wishes to do this trust, but because she has reason to believe that thruoughout their marriage friend's Dad has been unfaithful including with a lot younger woman - younger than friend and friend's estranged sibling.

This is why Mum wishes to put the house in trust - nothing to do with care home fees - but because she's worried that should she go first then friend's Dad will resume affair with younger woman and either change his will in her favour or re-marry.

Friend is reeling from all this because it's all new to her and she's no idea what to tell her Mum to do. The Mum has no wish to end the marriage (friend has asked that) 

Friend's Mum has no wish to tell the solicitor the real reason she's interested in this trust. 

I haven't got a clue what to suggest to friend who has turned to me.  

RAS

Since this is mum's problem and mum is trying to protect the daughter's inheritance, the logical thing would be to sever the tenancy on the property, if it's currently owned as a joint tenancy, and for mum to leave her half to her daughter. That means that if dad remarries, one half of the property value is secured for the daughter.

This is usually accompanied by an immediate post death trust, which allows dad to live in the house subject to some conditions. These vary but can allow him to downsize, or receive interest on the capital if he goes into care.

It may well be that this is what has been suggested by the solicitor? It's fairly standard as a way of dealing with blended families, care home fees and possible remarriage.

The daughter still needs her wits about her, as there was a case here where step-mum and her lover decided to move into a bigger house funded by both of them, and the OP's share of his father's house. Which might have been fine if they had not been insisting that his share in the new house was reduced. He refused to co-operate.

Mum may be discussing the finer details of the trust with the solicitor, in fact she'd probably be wise to do so as otherwise the daughter could die before the much younger wife. 

This sort of trust also avoids a situation where the daughter owns half the house and has to pay a hefty CGT bill when it's sold.

km1500

@RAS suggestion is worth considering

it is a simple matter to severe the joint tenancy at the land registry - this would mean mum and dad each owning 50% of the house and mum could leave her 50% safely to the daughter without any worries about it being left to anyone else

as the house would continue to be the main residence then cgt on any gain would not apply

whether she includes a clause in her will allowing the dad to live should she die first is up to her!

Spendless

Does this mean changing friend's parents property from joint tenants to tenants in common? I had wondered why same thing hadn't been suggested but I'm guessing this is due to the parents will which isn't leaving everything to friend but also to the Grandkids. If the property is left to daughter - then not as much is being left to grandkids (as majority of wealth is a property). If this is the case then I have pointed out that friend who is being made executor of will could just do a deed of variation - and include the grandkids more but it would depend on a level of trust from her parents that she'd do that.

I can't fathom out why a trust has been suggested rather than tenants in common? 

ETA - I queried it and It's def a trust document that friend has seen.  

RAS

Does the daughter know if the property is a joint tenancy or tenants in common?

The sort of trust I described works equally well, regardless of who the beneficiaries are. It complicates things a bit if the grandkids are underage, but not much. The details of the restrictions are included in the will.

If it's any other sort of trust, mum needs to talk to a tax specialist as well. There are a number of trusts that achieve mum's intentions but attract very high taxes which would erode any benefit.

But really the friend needs to talk a bit more to mum and get better information about what's in the will, as she may be unduly concerned, or mum's covert "instruction" to the solicitor may have led them to suggesting a complicated structure to meet them without considering the wider situation.

Spendless

Daughter thinks it's held as joint tenants - parents have had same property since she was a child, so doesn't think it will have been tenants in common as can't think of a reason why they would have done this so many years ago .

The will that is being made - hasn't been signed  yet is to leave 50% to friend and the other 50% (in effect friend's estranged sibling's 'share') equally between the 4 adult grandchildren. 

That has been exactly my friend's point to her Mum, the solicitor is suggesting things without knowing the full story. Mum is saying she can't say the true story cos friend's Dad is in the room. 

RAS

The parents aren't making a will. They both need wills and there's no reason why they have to be in the same room, although there could be some conflict of interest given the RL situation. Might make it a bit cheaper, but it's not essential. 

If what you report is correct, if dad dies first, and mum goes into care, the whole estate could be used for care fees. If it's organised as tenants in common, then one half of the estate is secured for the children and grandchildren, regardless of who dies first.

Spendless

Apologies that's me not wording it well. The parents are in the proceeds of making  both their wills - mirror ones. Friend's Mum will not have an appt on her own (friend tried this angle)

Yes, friend is aware. That was her whole objection of the trust. She didn't wish for either of her parents to 'give away' part of their estate in order for her to have something to inherit. She wanted them to have every penny of their estate for care home fees if they were needed so there was choices. It is her objection to her parents doing this which has made her Mum come clean about her true thoughts.

Still don't understand why a trust rather than TIC has been suggested. 

Though on the face of it perhaps a trust isn't such the bad idea friend first thought it was. 

RAS

That very much depends on the trust. Hopefully some of the more experienced posters who know about trusts can advise. Or if your friend sees the will/draft, they might get enough information to seek advice. 

Marcon

Spendless said:

Apologies that's me not wording it well. The parents are in the proceeds of making  both their wills - mirror ones. Friend's Mum will not have an appt on her own (friend tried this angle)

Yes, friend is aware. That was her whole objection of the trust. She didn't wish for either of her parents to 'give away' part of their estate in order for her to have something to inherit. She wanted them to have every penny of their estate for care home fees if they were needed so there was choices. It is her objection to her parents doing this which has made her Mum come clean about her true thoughts.

Still don't understand why a trust rather than TIC has been suggested. 

Though on the face of it perhaps a trust isn't such the bad idea friend first thought it was. 

If they are to give good advice, never mind 'best' advice, solicitors need to be told the relevant facts. The scenario being described is, sadly, one they'll have met plenty of times before - so letting embarrassment or squeamishness get in the way (however understandable that is) won't serve the best interests of the relevant parties.

Putting a house in trust can have hidden consequences - eg depending on its value/the value of the estate, it will not be possible to claim the Residence Nil Rate Band because the house isn't being left directly to a child/grandchild.

Spendless

Don't think IHT angle has even been considered. I know the property, I'd say at current value it's worth approx £300K. No idea and neither does friend of what money her parents have.