Putting house into trust

The_Governor

We're considering putting our house into trust to protect it for our kids and ensure the whole thing can't be taken for fees and the like. 

We're in our early 50s for context, we've got a solicitor appointment later in the month but I like to be as clued up as I can be!

I think we need a Life Trust, split 50/50 between me and my wife with the kids as reserve beneficiaries when we both pass

My question is around potential tax liability if anybody knows, are there tax liabilities while we're alive? The house will be our only residence 

Are there tax liabilities after we've both passed and the trust moves to the kids?

Appreciate any advice you can give

Devongardener

Why would you want to deprive yourselves of the chance to have the best care, in a good care home, if needed? If you have no means of funding your care you risk being put wherever the local authority deems fit, or minimal care in your own home.
Putting the house in trust can be seen as deliberate deprivation of assets.

The_Governor

Devongardener said:

Why would you want to deprive yourselves of the chance to have the best care, in a good care home, if needed? If you have no means of funding your care you risk being put wherever the local authority deems fit, or minimal care in your own home.
Putting the house in trust can be seen as deliberate deprivation of assets.

The plan is there'll be other ways for us to fund care, but we want to at least protect the house

Phoenix72

The_Governor said:

We're considering putting our house into trust to protect it for our kids and ensure the whole thing can't be taken for fees and the like. 

We're in our early 50s for context, we've got a solicitor appointment later in the month but I like to be as clued up as I can be!

I think we need a Life Trust, split 50/50 between me and my wife with the kids as reserve beneficiaries when we both pass

My question is around potential tax liability if anybody knows, are there tax liabilities while we're alive? The house will be our only residence 

Are there tax liabilities after we've both passed and the trust moves to the kids?

Appreciate any advice you can give

Just search the forum for all the similar queries. Unsurprisingly only the OP's see it as a good idea.

At the end of the day you are paying for professional advice. Hopefully they confirm it is not really a good idea. Hopefully a 'proper' solicitor and not one selling trusts like this.

Keep_pedalling

The only sort of trust you should consider is an immediate post death interest trust that would only kick in when one of you dies. This would protect your share of the house for your children if the surviving spouse re married and failed to make a new will or for some reason made one leaving everything to the new spouse. This can be achieved by an appropriate will being in place, and as you are reasonably young would be a sensible thing to do. 

This sort of trust has no downsides as far at tax is concerned where the life tenant it creates retains beneficial, but not legal ownership of your home.

Actually putting the house in trust now would be very foolish and has some serious potential tax issues for both CGT and IHT. 

Marcon

By happy coincidence there's an article by Paul Lewis in this week's Radio Times: https://www.radiotimesmoney.com/retirement/a-question-of-trust/

His conclusion? Trusts can work for very wealthy people. But if your main asset is your home and you have savings even in six figures they are generally a waste of money. The Society of Trust and Estate Practitioners (STEP) is a trustworthy organisation who can advise (step.org).

The_Governor said:

We're considering putting our house into trust to protect it for our kids and ensure the whole thing can't be taken for fees and the like. 

Too late in any case. See his earlier article: https://www.radiotimesmoney.com/retirement/hold-onto-your-house/

The_Governor

Thanks for all the comments, apologies I didn't get notifications of responses

So, I'm getting there's a bit fo anti trust sentiment but not much detail behind it so I'll go hunting for other threads to see what I can find

Keep_pedalling

The_Governor said:

Thanks for all the comments, apologies I didn't get notifications of responses

So, I'm getting there's a bit fo anti trust sentiment but not much detail behind it so I'll go hunting for other threads to see what I can find

No anti trust sentiment here, they can be very useful, but they need to be used with care and can cause major issues if not used appropriately and nothing you have said indicates that this is an appropriate situation for a trust. 

Beware of companies that charge large fees for setting up trusts that turn out to be useless. There are plenty of salesmen who sell these for the fat fees they can charge and will be long gone before you or your or those you leave behind find out that it was an expensive mistake.  

The_Governor

Keep_pedalling said:

The_Governor said:

Thanks for all the comments, apologies I didn't get notifications of responses

So, I'm getting there's a bit fo anti trust sentiment but not much detail behind it so I'll go hunting for other threads to see what I can find

No anti trust sentiment here, they can be very useful, but they need to be used with care and can cause major issues if not used appropriately and nothing you have said indicates that this is an appropriate situation for a trust. 

Beware of companies that charge large fees for setting up trusts that turn out to be useless. There are plenty of salesmen who sell these for the fat fees they can charge and will be long gone before you or your or those you leave behind find out that it was an expensive mistake.  

Would you mind expnanding on the thought a bit? What I'm really trying to do is protect half the value of the house to allow some inheritance to pass to the children, my understanding was that a Trust is a vehicle for this so could you explain why you don't think it's appropriate, I'm in learning mode so any and all opinions are welcomed

Keep_pedalling

The_Governor said:

Keep_pedalling said:

The_Governor said:

Thanks for all the comments, apologies I didn't get notifications of responses

So, I'm getting there's a bit fo anti trust sentiment but not much detail behind it so I'll go hunting for other threads to see what I can find

No anti trust sentiment here, they can be very useful, but they need to be used with care and can cause major issues if not used appropriately and nothing you have said indicates that this is an appropriate situation for a trust. 

Beware of companies that charge large fees for setting up trusts that turn out to be useless. There are plenty of salesmen who sell these for the fat fees they can charge and will be long gone before you or your or those you leave behind find out that it was an expensive mistake.  

Would you mind expnanding on the thought a bit? What I'm really trying to do is protect half the value of the house to allow some inheritance to pass to the children, my understanding was that a Trust is a vehicle for this so could you explain why you don't think it's appropriate, I'm in learning mode so any and all opinions are welcomed

An appropriate trust for people your age is most likely to be an immediate post death interest trust. In the unfortunate event of one of you meeting an early demise, you could leave your share of the house to your children but give the surviving spouse a life interest in the property. The surviving spouse would be the beneficial owner of the whole  property, with legal ownership of the share previously being owned by the deceased spouse residing with the trust.

This provides security for the survivor and protects your beneficiaries in the event the surviving spouse gets changes their will or fails to make a new one on getting remarried or goes into care. It is also tax efficient as you beneficiaries will not pay CGT when the property is eventually sold and none of your NRBs are used up. This sort of trust is created by your will, so all that needs to be done is to make sure you own your property as tenants in common and have an appropriate will in place. The trust does not come into Planck unless one of you dies.

If you were to put your house in trust now, you are creating a whole bunch of potential problems including some significant tax disadvantages both with CGT and IHT. 

Keep_pedalling

Another point, trust are rather difficult if not impossible to undo once created, which could create difficulties if you situation changes. For instant it would cause significant complication should you go though a divorce, where as a trust that only comes in to effect on your death can be prevented from coming into effect with a new will.