Dad died leaving half house in trust, what to do next?

FiFiFoo

Hi, sorry to start another thread but I couldn’t see recent posts similar to my situation.

My parents, tenants in common, set up mirror (?) trust wills so that on the first person passing their ‘half’ of the house goes into a trust - the trust period is from the first parent’s death until the second parent’s death (sorry, I know that sounds blunt). When the second parent passes, the trust period ends. My sibling and I are executors and trustees for both wills, and 50/50 recipients of the first half of the property when the trust period ends. The second half of the property is to be distributed between wider family. Hope that makes sense.

My mum and dad thought they were making things easier for my sibling and I by sorting this in advance but we are finding it really confusing. 

My dad died recently, mum thankfully is still with us hopefully for many more years. The solicitor that holds the original wills has advised that no trust had already been registered and that this only happens after probate is granted. They want quite a lot just to explain how it all works and this is upsetting my mum as she doesn’t have a lot of money - she and my dad thought they were making things easier by estate planning and that the money they spent originally would take care of it all.

My first question is, who ‘sets up’ the trusting private or granted, does something need drawing up officially by a solicitor and registering somewhere formally? Or is has the instruction in the will ‘created’ the trust? The property is probably worth around £250,000 - £300,000.

Secondly, will land registry need to be notified of the change in ownership if half of the property is now owned by a trust instead of my dad?

Thirdly, regarding valuing the property for probate, is it essential to pay for a RICS valuation on my dad’s half of the house - considering that my mum is continuing to live here as her home. We will need to get an up to date valuation in future when she passes (assuming her home doesn’t need to be sold before then).

I’m happy to add wording from the will if that helps, but some pointers in the right direction would be very welcome.

Thanks

Marcon

FiFiFoo said:

Hi, sorry to start another thread but I couldn’t see recent posts similar to my situation.

My parents, tenants in common, set up mirror (?) trust wills so that on the first person passing their ‘half’ of the house goes into a trust - the trust period is from the first parent’s death until the second parent’s death (sorry, I know that sounds blunt). When the second parent passes, the trust period ends. My sibling and I are executors and trustees for both wills, and 50/50 recipients of the first half of the property when the trust period ends. The second half of the property is to be distributed between wider family. Hope that makes sense.

My mum and dad thought they were making things easier for my sibling and I by sorting this in advance but we are finding it really confusing. 

My dad died recently, mum thankfully is still with us hopefully for many more years. The solicitor that holds the original wills has advised that no trust had already been registered and that this only happens after probate is granted. They want quite a lot just to explain how it all works and this is upsetting my mum as she doesn’t have a lot of money - she and my dad thought they were making things easier by estate planning and that the money they spent originally would take care of it all.

My first question is, who ‘sets up’ the trusting private or granted, does something need drawing up officially by a solicitor and registering somewhere formally? Or is has the instruction in the will ‘created’ the trust? The property is probably worth around £250,000 - £300,000.

Secondly, will land registry need to be notified of the change in ownership if half of the property is now owned by a trust instead of my dad?

Thirdly, regarding valuing the property for probate, is it essential to pay for a RICS valuation on my dad’s half of the house - considering that my mum is continuing to live here as her home. We will need to get an up to date valuation in future when she passes (assuming her home doesn’t need to be sold before then).

I’m happy to add wording from the will if that helps, but some pointers in the right direction would be very welcome.

Thanks

Sounds like a life interest trust. Loads of info on the internet - eg https://www.timms-law.com/wills-and-probate-blog-life-interest-trusts/#:~:text=A%20Grant%20of%20Probate%20will,assist%20them%2C%20if%20they%20wish.

Not clear why your parents did what they did, instead of simply leaving the property to the surviving spouse (assuming they were married) - possibly a misguided (but very common) belief that this would somehow avoid care home fees, perhaps, or a way to ensure that the wider family members would 'definitely' benefit. It does seem quite a strange and needlessly complicated way to go about things.

Either way, I'm afraid you almost certainly do need legal guidance to sort this out. There'll be plenty of people here willing to add their thoughts, but it won't actually give you the informed guidance you need.

Keep_pedalling

These types of trust are quite common and are out in place to protect the children’s inheritance in case the survivor remarries without making a new will or a will that leaves everything to the new spouse. There is no rush to do this you have 2 years from the date of death to register the trust with HMRC.

FiFiFoo

Keep_pedalling said:

These types of trust are quite common and are out in place to protect the children’s inheritance in case the survivor remarries without making a new will or a will that leaves everything to the new spouse. There is no rush to do this you have 2 years from the date of death to register the trust with HMRC.

Thanks for your reply, thats good to know. But what I’m struggling to find out about is how ‘the trust’ is actually set up - is it some paperwork drawn up by a solicitor? I know how a will is created, but I don’t know how a trust is created. 

There is a lot of information on the internet about setting this sort of arrangement in a will, but I can’t find what to do as an executor/trustee once someone has actually passed away. 

FiFiFoo

Marcon said:

FiFiFoo said:

Hi, sorry to start another thread but I couldn’t see recent posts similar to my situation.

My parents, tenants in common, set up mirror (?) trust wills so that on the first person passing their ‘half’ of the house goes into a trust - the trust period is from the first parent’s death until the second parent’s death (sorry, I know that sounds blunt). When the second parent passes, the trust period ends. My sibling and I are executors and trustees for both wills, and 50/50 recipients of the first half of the property when the trust period ends. The second half of the property is to be distributed between wider family. Hope that makes sense.

My mum and dad thought they were making things easier for my sibling and I by sorting this in advance but we are finding it really confusing. 

My dad died recently, mum thankfully is still with us hopefully for many more years. The solicitor that holds the original wills has advised that no trust had already been registered and that this only happens after probate is granted. They want quite a lot just to explain how it all works and this is upsetting my mum as she doesn’t have a lot of money - she and my dad thought they were making things easier by estate planning and that the money they spent originally would take care of it all.

My first question is, who ‘sets up’ the trusting private or granted, does something need drawing up officially by a solicitor and registering somewhere formally? Or is has the instruction in the will ‘created’ the trust? The property is probably worth around £250,000 - £300,000.

Secondly, will land registry need to be notified of the change in ownership if half of the property is now owned by a trust instead of my dad?

Thirdly, regarding valuing the property for probate, is it essential to pay for a RICS valuation on my dad’s half of the house - considering that my mum is continuing to live here as her home. We will need to get an up to date valuation in future when she passes (assuming her home doesn’t need to be sold before then).

I’m happy to add wording from the will if that helps, but some pointers in the right direction would be very welcome.

Thanks

Sounds like a life interest trust. Loads of info on the internet - eg https://www.timms-law.com/wills-and-probate-blog-life-interest-trusts/#:~:text=A%20Grant%20of%20Probate%20will,assist%20them%2C%20if%20they%20wish.

Not clear why your parents did what they did, instead of simply leaving the property to the surviving spouse (assuming they were married) - possibly a misguided (but very common) belief that this would somehow avoid care home fees, perhaps, or a way to ensure that the wider family members would 'definitely' benefit. It does seem quite a strange and needlessly complicated way to go about things.

Either way, I'm afraid you almost certainly do need legal guidance to sort this out. There'll be plenty of people here willing to add their thoughts, but it won't actually give you the informed guidance you need.

Not ‘strange’ at all, and I didn’t ask for judgement on what estate planning my very recently deceased dad put in place or why he chose not to leave his property to my mum. Re-read your reply please, it comes across as very pompous. 

I have searched the internet for hours and haven’t found the ‘informed guidance’ you mention, but sadly all resources seem to refer to setting this into a will, not what the executors/trustees should do once a person has passed. There isn’t a big pot of money to throw at solicitors, so as a first step I tried asking here, a place I have found very many useful answers in the past - just to benefit from others’ experience before seeking legal support.

As you had nothing constructive to contribute, I find it surprising you took the time to reply.

mybestattempt

@FiFiFoo

The trust is created by the will.

You may find this HMRC guidance helpful :

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm23020

This may also be helpful:

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

Newly_retired

For what it's worth, I used a solicitor and an accountant to set up and register the necessary legal work in similar circumstances, as I could not find enough information online to be sure of doing it right myself.

FiFiFoo

mybestattempt said:

@FiFiFoo

The trust is created by the will.

You may find this HMRC guidance helpful :

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm23020

This may also be helpful:

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

Thank you, this is really helpful. I have read (and re-read) the wording within the will and I wasn’t sure if that was ‘the trust’ or whether a trust was something set up separately according to those instructions (like a contract). Much appreciated 

fairplayforall

Sorry don't have any specific information but my Mum passed last October and I forgot about the trust.  We have probate and the house is for sale but just received a fine from HMRC as didn't submit a return for the trust.  Apparently I have to contact HMRC and cancel the trust

Keep_pedalling

fairplayforall said:

Sorry don't have any specific information but my Mum passed last October and I forgot about the trust.  We have probate and the house is for sale but just received a fine from HMRC as didn't submit a return for the trust.  Apparently I have to contact HMRC and cancel the trust

This sounds odd. If this was an immediate post death interest transfers then it has to be registed within two years of the death of the first spouse and if the surviving spouse dies before the two years are up I don’t think it needs registering, so you should not be receiving a fine from HMRC.

RAS

There is reference to a 90 day limit for some trusts when there is an ongoing trust created by a tenancy in common in the first link. Not that I fully understand it.