Inheritance in a trust and UC

itsthelittlethings

Actually I'm not sure about that family thing as I just had a swuiz at the regulations and couldn’t find it but I am on my phone.

https://assets.publishing.service.gov.uk/media/65d336b3e1bdec2be1322238/admh1.pdf

Regulations here. I’ll try and have a look later.

gbhxu

itsthelittlethings said:

(Removed by Forum Team).

Answer to a similar question last year on shared ownership of a house after death and benefit claimant

https://forums.moneysavingexpert.com/discussion/6472839/would-inheriting-a-share-of-a-property-affect-benefits

huckster

This property in trust does not need to be disclosed at this time, as being in a legal trust and lived in by a relative, means it would not be counted as capital on UC.

There would be no land registry record in the OP's name.  Any record being added relates to a trust for the beneficiaries of the deceased plus the relative owning the other 50%.  So I would not disclose as not in claimants name, only in a trust.

All that is being talked about here is a possible amount of capital that may be available in the future, for which there is no likely legal way of accessing it now for someone in receipt of benefits.

Yamor

itsthelittlethings said:

(Removed by Forum Team).

itsthelittlethings said:

Actually I'm not sure about that family thing as I just had a swuiz at the regulations and couldn’t find it but I am on my phone.

https://assets.publishing.service.gov.uk/media/65d336b3e1bdec2be1322238/admh1.pdf

Regulations here. I’ll try and have a look later.

(Removed by Forum Team)

Firstly, basics, what you have linked to is internal guidance, not regulations.

Secondly, you have provided the wrong chapter of the guidance. The correct chapter is actually here:
https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

Thirdly, you have the law wrong. As you are clearly not intelligent enough, I'll refer to the guidance I have linked to above, and not to the actual regulations:
Property lived in by a relative (and a stepmother is a relative for these purposes) is only ignored if they are over pension age or have LCW status. Hence the questions I asked above. See paras. H2048-H2049 of the guidance.

Yamor

huckster said:

This property in trust does not need to be disclosed at this time, as being in a legal trust and lived in by a relative, means it would not be counted as capital on UC.

There would be no land registry record in the OP's name.  Any record being added relates to a trust for the beneficiaries of the deceased plus the relative owning the other 50%.  So I would not disclose as not in claimants name, only in a trust.

All that is being talked about here is a possible amount of capital that may be available in the future, for which there is no likely legal way of accessing it now for someone in receipt of benefits.

This isn't correct.

Assets held on trust are still your assets. See in particular point 5 of para. H1020 and para. H1035 of the guidance linked to by @itsthelittlethings. See also para. H1225.

However, it is very likely that even if the capital is not disregarded, its value is extremely low, if not nil.
Firstly, the OP only owns 10% as remainderman. Even if that could be sold, its value is likely to be extremely low.
Secondly, due to difficulties in selling, a DM (or at least a tribunal) will almost certainly assign it nil value anyway.
There have been a number of UT cases which confirm that it is certainly possible for the value of such an asset to be nil.
See also paras. H1638-H1639 of the guidance referred to above.

However, clearly, it is simpler if it could be completely disregarded anyway, hence the questions I asked above...

Keep_pedalling

Yamor said:

huckster said:

This property in trust does not need to be disclosed at this time, as being in a legal trust and lived in by a relative, means it would not be counted as capital on UC.

There would be no land registry record in the OP's name.  Any record being added relates to a trust for the beneficiaries of the deceased plus the relative owning the other 50%.  So I would not disclose as not in claimants name, only in a trust.

All that is being talked about here is a possible amount of capital that may be available in the future, for which there is no likely legal way of accessing it now for someone in receipt of benefits.

This isn't correct.

Assets held on trust are still your assets. See in particular point 5 of para. H1020 and para. H1035 of the guidance linked to by @itsthelittlethings.

However, it is very likely that even if the capital is not disregarded, its value is extremely low, if not nil.
Firstly, the OP only owns 10% as remainderman. Even if that could be sold, its value is likely to be extremely low.
Secondly, due to difficulties in selling, a DM (or at least a tribunal) will almost assign it nil value anyway.

However, clearly, it is simpler if it could be completely disregarded anyway, hence the questions I asked above...

That is also not correct. Currently the legal ownership of the house is split between the widow and an immediate post death trust, beneficial ownership however belongs solely to the widow and does not pass to the remaindermen until her death. 

This is a fairly common type of trust used in wills and as well as protecting the inheritance of children and the security of the surviving spouse it also has a number of financial advantages. For IHT purposes the whole hose forms part of the survivors estate so the trust is not subject to CGT on the eventual sale, it does not effect a remanderman’s first time buyer status, second home SDLT or benefits.

If a remainderman dies before the surviving spouse, it does not form part of their estate and their share will pass as per the terms of the trust or, if they are not defined, by the laws of intestacy on the trust settlor’s estate.

Yamor

Keep_pedalling said:

Yamor said:

huckster said:

This property in trust does not need to be disclosed at this time, as being in a legal trust and lived in by a relative, means it would not be counted as capital on UC.

There would be no land registry record in the OP's name.  Any record being added relates to a trust for the beneficiaries of the deceased plus the relative owning the other 50%.  So I would not disclose as not in claimants name, only in a trust.

All that is being talked about here is a possible amount of capital that may be available in the future, for which there is no likely legal way of accessing it now for someone in receipt of benefits.

This isn't correct.

Assets held on trust are still your assets. See in particular point 5 of para. H1020 and para. H1035 of the guidance linked to by @itsthelittlethings.

However, it is very likely that even if the capital is not disregarded, its value is extremely low, if not nil.
Firstly, the OP only owns 10% as remainderman. Even if that could be sold, its value is likely to be extremely low.
Secondly, due to difficulties in selling, a DM (or at least a tribunal) will almost assign it nil value anyway.

However, clearly, it is simpler if it could be completely disregarded anyway, hence the questions I asked above...

I don’t think that is 100% correct. Currently the legal ownership of the house is split between the widow and an immediate post death trust, beneficial ownership however belongs solely to the widow and does not pass to the remaindermen until her death. 

This is a fairly common type of trust used in wills and as well as protecting the inheritance of children and the security of the surviving spouse it also has a number of financial advantages. For IHT purposes the whole hose forms part of the survivors estate so the trust is not subject to CGT on the eventual sale, it does not effect a remanderman’s first time buyer status, second home SDLT or benefits.

If a remainderman dies before the surviving spouse, it does not form part of their estate and their share will pass as per the terms of the trust or, if they are not defined, by the laws of intestacy on the trust settlor’s estate.

You are correct from a tax perspective that it is treated as being fully in the widow's estate, however, that does not change the legal beneficial ownership of the capital under the trust (which is an IPDI trust as you say).
As such, the remainderman does have an asset for benefit purposes.
It is indisputable that the OP has an asset with value, although the value may be very low.

If the remainderman dies before the widow, then it will depend on the terms of the original IPDI trust as to whether the asset will pass on through the remainderman's estate or something different.
It will basically depend on whether the original trust made the remainderman's interest contingent on them surviving the widow.

So, it may only be a contingent, reversionary interest, but that is still something of value!

RAS

gbhxu said:

peteuk said:

Not 100% sure but if someone is living in the house then it doesn't go to probate. 

Equally if your step mum is living it the property, it automatically transfers to her.  Only on her passing will you gain 50% (shared as detailed).  On her passing then it will go to probate and the will of both your father and step mother will be taking into consideration.

What are the terms of the trust fund?  You will need to declare this as it can be seen as DoC and as such a DM will then look at it and make a judgement.   Any funds earnt from the trust fund can be viewed as unearned income and so may be deducted from your UC accordingly.  But this all goes on the terms of the fund and your access or ability to access the funds. 

Wouldn't need probate if the property goes 100% to Step-Mother.

Probably have to go through Probate twice.

1st Time - 50% of house to Step Mother and 5 joint owners with 10% each
Will also need to notify Land Registry of change of ownership

2nd Time - Step Mother's 50% divided by the other 5 joint owners. Joint owners now own 20% of house each
Will also need to notify Land Registry of change of ownership (removing Step-Mother from ownership)

This is incorrect.  @marywooyeah , please go over to the death and probate forum and ask advice about this trust. It sounds like an Immediate Post Death Interest Trust. If so, the trust needs registering with the HMRC within 2 years of dad's death and a restriction entering on the Land Registry.

But it is really important that your brother doesn't register the ownership of the siblings, even of step-mother permits, because you will all then become liable for CGT when she dies.

And it can also affect IHT liability.

huckster

How can the OP currently obtain any beneficial interest in this property at the moment ?

marywooyeah

Hi, I have checked this morning and she is 51 - I thought she was in her late fifties.  I don't think she receives any benefits herself but I know she is only working a few days a week as she is grieving heavily.  When the house is eventually sold when she dies her 50% share will pass in accordance with her own will, and our one fifth shares of the remaining 50% are ours to do what we want with individually.    So it is our shares that are being put into trust, not actual money.