Inheritance in a trust and UC

Yamor

huckster said:

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

They could sell the reversionary (and possibly contingent) right to their share of the asset.

I would pay a tenner for it! 

But in all seriousness, it is likely to be very difficult to find a buyer, so it may well be possible to convince a DM or Tribunal to give it a value of nil.

Yamor

marywooyeah said:

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.

OK.

As per the above conversation, you will very likely still be fine.

What is the approximate market value of the property?

huckster

I have been involved in these property trust situations on a couple of occasions, where I was one of many beneficiaries and there was a relative living in the property until their passing. 

In my examples, the Solicitors who drafted the wills and trust arrangements, made sure it was all held by the Solicitors acting as trustees. Beneficiaries had no rights to access or sell their interest in the property. It was down to the trustees at the time  of the relative passing to sell the property and distribute to beneficiaries.

I go back to my original point, that if the OP does not have the property legally registered to them, there are currently no legal means to obtain any value in the property.  Therefore if they completed the A64 other property form for UC Decision Maker, I am not sure what they would be disclosing at this stage. 

Yamor

huckster said:

I have been involved in these property trust situations on a couple of occasions, where I was one of many beneficiaries and there was a relative living in the property until their passing. 

In my examples, the Solicitors who drafted the wills and trust arrangements, made sure it was all held by the Solicitors acting as trustees. Beneficiaries had no rights to access or sell their interest in the property. It was down to the trustees at the time  of the relative passing to sell the property and distribute to beneficiaries.

I go back to my original point, that if the OP does not have the property legally registered to them, there are currently no legal means to obtain any value in the property.  Therefore if they completed the A64 other property form for UC Decision Maker, I am not sure what they would be disclosing at this stage. 

In a trust situation, the legal owner will always be the trustees, but that does not mean the beneficiaries have nothing they can sell.

There is a huge amount of case law on this issue.

Also have a read through of Chapter H1 of the ADM guidance, linked to earlier in this thread. See in particular paras. H1035-H1037, as well as the paras. I referred to earlier in thread.

Such a right is often known as a "chose in action".

marywooyeah

Hi, my understanding is that the house is worth 600k, so one half the property worth 300k goes to my step mum to live in the house until she dies and she can allocate her share as she likes in her will, the other half of the house worth 300k goes into trust for me, my brothers and one third party.  None of us can access our share as the property cannot be sold until she dies.

marywooyeah

Huckster - someone else earlier mentioned a deed being registered at the land registry for the beneficiaries share - would that impact UC?

huckster

 Re registering deed. Is that necessary and if done what are the consequences?

With the 2 I have seen, don't think any deed was registered, but then they were both dealt with by same firm of Solicitors.

Grumpy_chap

gbhxu said:

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

Is that what is happening the first time?
50% to Step Mother.
I am not sure that the other 50% goes to 5 joint owners with 10% each.  The OP indicated that second 50% goes to Trust, of which the 5 individual will become future beneficiaries.  

gbhxu said:

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)

Is that what happens the second time?
The Step Mother might leave her 50% to an entirely different set of beneficiaries.

Does the Will also make provision for the Step Mother selling the house prior to her eventual passing, but retaining life-interest in the value of the 50% that goes to trust now?  Consider future downsizing.

marywooyeah

hi Grumpy chap - your first comment is correct in terms of understanding the situation.  I am being told that it will be registered at the land registry that we have a share in the property but my understanding was that if it is placed in a trust it is essentially an inheritance within an inheritance as we cannot access our shares until the house is sold after her death.  The will says that she is to have a life interest in the house so the plan is that she stays there until she dies, and she is free to give away her share of the house in her will as she sees fit.

RAS

On further thought, there is no way to register the 50% share of the property to the siblings absolutely; not least as the maximum number of owners is 4 and with step-mum and 5 siblings, that's not going to happen.

I think you need to ask your brother some basic questions, and a little extra.

" Please can you clarify what sort of trust was set up in dad's will? Is this an Immediate Post Death Interest Trust? If so, who are appointed trustees in the will?

Can you clarify whether you are registering a restriction on the deeds which ensures the property can't be sold without the consent of trustees or the siblings? If are you intending to register absolute title this clearly has implication for benefits and taxes.

Given step-mum's age it could be another 50 years before the trust can realise the assets. Can you share with all of us the terms of the trust so that we all understand what we and step-mum are allowed to do? I'm aware that sometimes the person with life interest is allowed to sell, and continue to benefit from the capital released, for example.

I believe that this sort of trust needs registering with the HMRC?"

The little extra

After a death, his widow told his children the property was going her initially but that on her death his portion would pass to his children. When she died, that didn't happen. It proved to be a joint tenancy anyway and there was no provision in the will for the children. They had wondered when she sold the property years earlier, but failed to understand what should have happened if she only had life interest in part of the property. 

There's been at least one thread on here about a widow who remarried, wanted to buy a nicer property with the portion held in trust for her step-son, and intended to reduce the value of his portion. Half of a £500k house should translate into a quarter of a £1m property but she intended to limit his share to £250k or some such. He wasn't sure if this was OK?

It's likely to be decades before any siblings benefit from your father's will, so it's important that everyone understands the rules. Certainly in my family a young widow lived another 60 years before a trust supporting her was wound up and distributed to her nephews and nieces, some of whom were already dead.