Do I need to change Title deeds ?

Olawat

My husband recently passed away. We own our home so no mortgage involved. We were registered as Tenants in common on the Land registry so that upon one of our deaths half of the house would go to our two adult children. The Will also stipulated that his half of the house was to be left to the children. 

My question is whether I need to now put my children’s names on the deeds but as in a trust only, not as joint or owners or tenants in common ?  Would this affect their ability when applying or changing their mortgages? 

Or is it possible to do nothing more regarding changing land registry because we were Tenants in common??
I have attempted several times to fill in the necessary forms but get more and more confused as to what is best. It is very confusing. 

I thought I would ask advice here before making an appointment with a solicitor. 

Thanks in advance. 

Keep_pedalling

Did your husband’s will also give you a life interest in his share?

Willeri

By the sound of it your late husbands Will settled his share of the property into a life interest trust where your children are beneficiaries. Who are the trustees from his Will? Maybe them, maybe you as well. The trustees names need adding to LR records as legal owners and late husbands name removing. The trust needs establishing and registering with HMRC within 2 years of death. LR firms are TR1 and DJP, but all best done professionally so you know it’s done correctly especially as you say you are confused by the forms/process. 

Olawat

Keep_pedalling said:

Did your husband’s will also give you a life interest in his share?

Yes it does. 

RAS

In which case hopefully it makes clear what happens in certain circumstances, for example what happens if you sell the house or need to go into care? Does any surplus money from his half go to the children or are you entitled to the income generated by the capital? 

Keep_pedalling

Olawat said:

Keep_pedalling said:

Did your husband’s will also give you a life interest in his share?

Yes it does. 

In which case your children have not inherited it yet as the will created an immediate post death interest trust and legal ownership sits with the trust. You are the beneficial owner. This is a good thing as it avoids CGT on that share when it is eventually sold and if either of your children do not already own their own home they don’t loose their first time buyer status and won't have to pay an additional 5% SDLT when they do by somewhere.

Your husband’s share of the house forms part of your estate for IHT purposes but none of his NRB would have been used up doing this, so is available to transfer to yours.

You can opt to change the LR to show that half is now owned by the trust but you don’t have to. What is important is that the trustees register the trust with HMRC within 2 years of his death.

RAS

I'd add, please do not transfer to the children any portion of the house now. 

It won't affect their rights to inherit.

If they don't already own a home, they will lose any first time buyer benefits.
It could leave them with a very nasty SDLT bill if they want to buy another house.
It could adversely affect their right to claim benefits, particularly for rent.
They will end up with a totally avoidable CGT liability when the house is sold.

It appears that solicitors (or will writers) are "protecting" half the house from care fees using TIC but not explaining the more important advantages of the IPDI trust.

Olawat

Keep_pedalling said:

Olawat said:

Keep_pedalling said:

Did your husband’s will also give you a life interest in his share?

Yes it does. 

In which case your children have not inherited it yet as the will created an immediate post death interest trust and legal ownership sits with the trust. You are the beneficial owner. This is a good thing as it avoids CGT on that share when it is eventually sold and if either of your children do not already own their own home they don’t loose their first time buyer status and won't have to pay an additional 5% SDLT when they do by somewhere.

Your husband’s share of the house forms part of your estate for IHT purposes but none of his NRB would have been used up doing this, so is available to transfer to yours.

You can opt to change the LR to show that half is now owned by the trust but you don’t have to. What is important is that the trustees register the trust with HMRC within 2 years of his death.

Does this type of trust need registering with HMRC though? I have copied and pasted a section below. 

You do not need to register your trust if it is a Schedule 3A trust, unless it has a liability to UK taxation. Schedule 3A trusts are also referred to as ‘excluded express trusts’.

Your trust is a Schedule 3A trust if it is any of the following:

• set up on death that takes assets from the estate and is closed within 2 years of death (also called a ‘will trust’)
• a trust with less than £100 and set up before 6 October 2020 (also called a ‘pilot trust’)
• a co-ownership trust set up to hold shares of property or other assets jointly owned by 2 or more people as ‘tenants in common’

Keep_pedalling

They do unless the trust is wound up with 2 years as per the first clause in your post.