PA1P question about "settled" land.

micklesthwaite

Hi,

I am currently doing the probate myself on my dad's estate. He and my mother owned their house as joint tenants and he left his half of the house to my brother and me in his will. The will says that my mother can continue to live in it as long as she is still alive. I have downloaded the paper version PA1P in order to have a look before completing the probate application online.

There is a question I don't understand:
"2.12   Was there any land vested in the person who has died which was settled 

previously to their death and which remained settled land not withstanding 

their death?"

As my dad's only land was his half of the house is the answer to this question yes or no?
Even after searching I'm not clear what "vested" or "settled" means in this context. Can anyone help me understand if this applies to my dad's situation please.

Many thanks

poppystar

The answer is no. Settled land is something to do with land in trust for future generations, I’m sure someone will explain that better! The only people I’ve known it to apply to are related to farming or large family estates. This is nothing to do with the life interest set up in your father’s Will. 

I assume you meant ‘tenants in common’ for your parents house or if they were just plain joint tenants then he could not have left his half to you as your mother would have become full owner on his death.

micklesthwaite

Thanks,

Sorry yes, I did mean tenants in common.

Thanks for your reply

Keep_pedalling

On a separate point the will has created an immediate post death interest trust. His half of the house is in trust until your mother dies or is no longer in need of the house. Your mother is now the beneficial owner of his share and the trust is the legal owner. 

You and your sibling don’t actually inherit until she dies or moves out. The trust needs to be registered with HMRC within two years of your father’s death.

micklesthwaite

Thanks KP.

Would you know if I need to get the deeds updated with the land registry to have my brother and myself added as 25% owners each?

If so would my brother and myself become legal owners at that point?

Thanks

RAS

micklesthwaite said:

Thanks KP.

Would you know if I need to get the deeds updated with the land registry to have my brother and myself added as 25% owners each?

If so would my brother and myself become legal owners at that point?

Thanks

No. The IPDI trust is designed to ensure maximum IHT allowance by transferring everything to mum, and minimise CGT by avoiding your absolute ownership until you have the option of selling. Whilst also protecting half the property value if mum needs care or remarries.

The will may indicate who are the trustees? Otherwise, mum can amend the existing restriction on sale from dad to your and/or brother. And the executors or trustees need to register the Trust with HMRC within 2 years of death.

Keep_pedalling

RAS said:

micklesthwaite said:

Thanks KP.

Would you know if I need to get the deeds updated with the land registry to have my brother and myself added as 25% owners each?

If so would my brother and myself become legal owners at that point?

Thanks

No. The IPDI trust is designed to ensure maximum IHT allowance by transferring everything to mum, and minimise CGT by avoiding your absolute ownership until you have the option of selling. Whilst also protecting half the property value if mum needs care or remarries.

The will may indicate who are the trustees? Otherwise, mum can amend the existing restriction on sale from dad to your and/or brother. And the executors or trustees need to register the Trust with HMRC within 2 years of death.

In addition the trust provides additional security for your mother in that the house can’t be used as an asset that creditors could go after should you or your sibling run into financial difficulty. If you or your sibling don’t already own your own property It also prevents you losing your first time buyer status or have to pay an addition 3% SDLT if you do buy.

micklesthwaite

RAS said:

micklesthwaite said:

Thanks KP.

Would you know if I need to get the deeds updated with the land registry to have my brother and myself added as 25% owners each?

If so would my brother and myself become legal owners at that point?

Thanks

No. The IPDI trust is designed to ensure maximum IHT allowance by transferring everything to mum, and minimise CGT by avoiding your absolute ownership until you have the option of selling. Whilst also protecting half the property value if mum needs care or remarries.

The will may indicate who are the trustees? Otherwise, mum can amend the existing restriction on sale from dad to your and/or brother. And the executors or trustees need to register the Trust with HMRC within 2 years of death.

Thanks for your replies. They've helped me understand that there are two sets of assets in the will now.

My brother and myself are also the trustees and executors of the will.

I take it my father's half of the house still need to be included as an asset in the probate application even though it's going to the trust, is that correct?

Also, how are the authorities informed or aware that my father's part of the house is held in trust, for my brother and myself, between now and when the trust is registered with HMRC?

It seems to me that the only record of this is on the writtern will in the solicitor's strong room. Or has the will (writtern in 2010) been registered somewhere with the authorities?

Keep_pedalling

Yes it still needs to be included for the probate valuation. You mother is now the beneficial owner and forms part of her estate for IHT purposes.

You need to register the trust with HMRC within 2 years of your father’s death.

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

micklesthwaite

Keep_pedalling said:

Yes it still needs to be included for the probate valuation. You mother is now the beneficial owner and forms part of her estate for IHT purposes.

You need to register the trust with HMRC within 2 years of your father’s death.

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

Sorry, I'm confused now. How is my mother beneficial owner if my father has left his half in trust to my brother and me?

Why is it part of her assets for IHT if it's not possible for her to pass it on to anyone ?

thanks

poppystar

micklesthwaite said:

Keep_pedalling said:

Yes it still needs to be included for the probate valuation. You mother is now the beneficial owner and forms part of her estate for IHT purposes.

You need to register the trust with HMRC within 2 years of your father’s death.

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

Sorry, I'm confused now. How is my mother beneficial owner if my father has left his half in trust to my brother and me?

Why is it part of her assets for IHT if it's not possible for her to pass it on to anyone ?

thanks

In the literal sense that she has the full benefit of the house while she is alive. There is a difference between legal ownership which is split now between your mother and the trust and the beneficial ownership which falls to her. It’s also the reason why you won’t have to pay any CGT on any increase in value of your half between now and when your mother passes.