Is this advice correct?

Downthedrain

A will trust was created upon the death of my friend and his widow has sought advice from the "Estate Planning Solutions" company that originally sold the package of the will etc. This is not a firm of solicitors. My friends half of the property was left in trust for their children and she has the benefit of living in the house.

The question is, is this strictly necessary given that the will defines the trustees and beneficiaries?

The advice given is:

The Land Registry title needs to be updated to put the will trust in place, this involves removing xxxxx and replacing with the trustees of the trust.

This can be done yourself or our Solicitors can do this for a fee of £900 including VAT. There are 4 forms which would need completing: DJP form (this form is used to remove xxxxx from the Land Registry Title). A TR1 form (this is used to add the name of the trustees to the title) a declaration of trust form (this confirms the percentages in which the parties own the property) and an RX1 form (to put the relevant restriction on the title).

RAS

Interesting. 

I'm not a lawyer either, but I'd suggest @Land_Registry can advise what forms need filing in, if anything. And I'd suspect they and folk here would know how to complete them. 

Do suggest the widow spends £3 with the Land Registry making sure the tenancy was severed when the will was written, and check if there was a deed of trust created at the time the tenancy was severed. Otherwise the assumption is that the division is 50:50.

And remind the trustees that they need to register the Trust with HMRC within 2 years of the date of death.

Keep_pedalling

You are correct, it is not nessasary to change the LR, although it would be wise in certain circumstances. If you friend’s widow is relatively young and could get married again than it may be worth doing.

The one thing that will need to be done is to register the trust with HMRC within two years of the death. 

Land_Registry

RAS said:

Interesting. 

I'm not a lawyer either, but I'd suggest @Land_Registry can advise what forms need filing in, if anything. And I'd suspect they and folk here would know how to complete them. 

Do suggest the widow spends £3 with the Land Registry making sure the tenancy was severed when the will was written, and check if there was a deed of trust created at the time the tenancy was severed. Otherwise the assumption is that the division is 50:50.

And remind the trustees that they need to register the Trust with HMRC within 2 years of the date of death.

It's such a tough area for us to advise on other than once you have decided what you want to do then we can link you to the forms and guidance needed to then make an application to update the register as appropriate.
The key is deciding what needs protecting as we register the legal ownership which is always dealt with as a whole and can't be split.
The TIC/shares/trust/will etc all split the beneficial ownerships and those can be protected in a variety of ways but don;t have to be. I say don't have to be simply because the beneficial split exists through the documents drawn up and signed whatever is on the register.
The 'protection' for example afforded by the restriction puts everyone on notice that such a split/trust exists and restricts the registered owner(s) in how they can then deal with the property for example
In my experience joint owners who draw up such wills/trust generally apply to register a form A restriction. And when one of them dies they might update the register re the death with a form DJP but there's no actual need to as the death, very sadly, is a fact and can be proven as and when needed.
Some may also decide to transfer the legal ownership whereby the surviving sole owner transfers it to themselves plus the beneficiaries/children. But I suspect, but wouldn't know, that some don't as the children might be under 18, want to buy their own home and owning this one hampers that in some way and so on.
So as far as the advice given goes it is not wrong and may well be what was discussed and agreed upon when the joint owners set up the wills/trust as they did. Whether it's necessary is really something for the widow and children should get legal/financial advice on 

Downthedrain

That's a really helpful reply, thanks.

Out of interest, who is the legal owner of the property in this case if it can't be split?

Land_Registry

Downthedrain said:

That's a really helpful reply, thanks.

Out of interest, who is the legal owner of the property in this case if it can't be split?

The legal ownership passes to the surviving registered joint owner. That doesn't mean that the wills/trust etc are all ignored/worthless
It simply means that IF the property is to be dealt with, so for example transferred, then any Transfer would be by that sole surviving individual. Probate is not required as the legal ownership of the property does not form part of the deceased's estate but the deceased's beneficial ownership/share still exists and should always be considered before next steps are taken re both the legal and beneficial ownerships, especially if the beneficiaries want to realise the latter.
To all intents and purposes we have the 'easy' bit to deal with, the legal ownership as that is always dealt with as a WHOLE. The complexities tend to arise around the beneficial ownerships and how they are realised especially when the surviving owner has the right to still live in the property. We don;t deal directly with the beneficial ownerships inc wills/trusts etc hence the need to always consider everything before then deciding what to do and if that involves updating the registered information or not.

Downthedrain

Thanks. The reasons to transfer the title to include the trustees using TR1 would seem not to be necessary. If this is done, could there be unintended consequences at a later stage for those named? My thought is that at the moment the children are beneficiaries (or perhaps, remaindermen) rather than owners. One of the children has not yet bought their own home. What are the pros and cons of transferring the title?

RAS

Adding beneficiaries as trustees is one option.

Adding the children as owners would be unwise financially, not least as it creates an immediate CGT liability, and issues round SDLT and first time buyer status.  And probably precluded anyway by the trust which was designed to avoid those issues.

Land_Registry

Downthedrain said:

Thanks. The reasons to transfer the title to include the trustees using TR1 would seem not to be necessary. If this is done, could there be unintended consequences at a later stage for those named? My thought is that at the moment the children are beneficiaries (or perhaps, remaindermen) rather than owners. One of the children has not yet bought their own home. What are the pros and cons of transferring the title?

What's necessary or needed is where your wider legal/financial advice comes in. The register showing their joint ownership plus form A restriction still does it's job in many ways as whilst one of the joint owners has died, that's factual, and the trust is protected by way of the restriction and the trust/wills etc
You may decide that there's nothing to do at this stage as all interests are protected. And as long as everyone is aware of what's what and what happens next in any given scenario, then that may be fine.
In my experience the key is understanding what's there in law to protect each interest and what impact future events such as death, care home, buying own home and more may have. After considering such things that's when the question of necessity tends to be answered

RAS

The exact terms of the life interest trust will be in the will. Sometimes the trust ends when the spouse goes into care or remarries, sometimes they benefit from interest on any capital from down-sizing or sale until death.

I'd suggest the executors, widow and ultimate beneficiaries book a meeting with a good family law solicitor and send them a copy of the will in advance. So everyone understands what the terms of the trust are. And who is required to register with HMRC.

Downthedrain

The advice and comments received are of great value in making progress with this, not least in that it helps with a better understanding in order ask informed questions of a solicitor. One thing at the moment that's come out of this is there's no immediate imperative to do anything without proper consideration - particularly in relation to the Land Registry. This reduces the anxiety and overwhelming burden that my friend's widow is going through right now where everything appears to necessitate immediate action.