Investing money in Trust

Wilma98

@poseidon1 I think after my Dad's property has sold and the Life Tenant has purchased a new property there will potentially be about £100k to invest. The problem we have is the Life Tenant wishes to buy a retirement property in an area where they depreciate rather than appreciate (something we are opposed to). It will also leave us with extortionate ground rent, service charges and council tax that we have to cover whilst trying to sell, and it could sit on the market for a long period of time. There will also be 'exit selling fees'. That is why I need to be wise with whatever money is left to invest!

IanManc

Wilma98 said:

@poseidon1 I think after my Dad's property has sold and the Life Tenant has purchased a new property there will potentially be about £100k to invest. The problem we have is the Life Tenant wishes to buy a retirement property in an area where they depreciate rather than appreciate (something we are opposed to). It will also leave us with extortionate ground rent, service charges and council tax that we have to cover whilst trying to sell, and it could sit on the market for a long period of time. There will also be 'exit selling fees'. That is why I need to be wise with whatever money is left to invest!

Just an idea ....... but could you persuade the life tenant to rent a retirement property and use the income from the trust - including the income from investing the proceeds of sale of the house - to pay the rent? Then you wouldn't be left with the millstone of a retirement property to sell, and all the associated charges, possibly for years? 

Wilma98

@IanManc the life tenant inherited a large sum of money from my Dad but doesn't want to use it to buy a retirement property for herself. She would rather keep the cash free for her use and effectively use our inheritance as a means to buy somewhere to live. She knows she can do this according to the terms of the life tenancy and then it doesn't leave her family with the headache and financial burden of a retirement property later down the line.

poseidon1

Wilma98 said:

@poseidon1 I think after my Dad's property has sold and the Life Tenant has purchased a new property there will potentially be about £100k to invest. The problem we have is the Life Tenant wishes to buy a retirement property in an area where they depreciate rather than appreciate (something we are opposed to). It will also leave us with extortionate ground rent, service charges and council tax that we have to cover whilst trying to sell, and it could sit on the market for a long period of time. There will also be 'exit selling fees'. That is why I need to be wise with whatever money is left to invest!

Your father ( unknowingly) has placed you in an invidious position with a surviving widow intent on maximising her financial position ( and that of her own family) at your expense.

The fact that she is also co trustee, limits your options in making sensible  investment decisions for the funds available.

If ( as seems likely) you are llimited  to an interest bearing account, the interest generated on £100k will make only a modest and declining contribution to the Life Tenant's living costs.  Therefore more and more of her own resources over the years will be needed to make up the difference. Not much of a consolation for you, but these blended family scenarios do seem more often than not  to give rise to varying degrees of disparities between the surviving families.

Since the widow is both Life tenant and a  Trustee, it would be fair ( in my view)  to leave all HMRC income tax compliance to her, given her attitude.

Wilma98

@poseidon1 To add to the nightmare, I requested the Life Tenant appoint a Lasting Power of Attorney in the event she loses capacity (she is elderly), but the solicitor told me she can't be forced to do it and I honestly don't think she'll bother!

poseidon1

Wilma98 said:

@poseidon1 To add to the nightmare, I requested the Life Tenant appoint a Lasting Power of Attorney in the event she loses capacity (she is elderly), but the solicitor told me she can't be forced to do it and I honestly don't think she'll bother!

That really is adding insult to injury, can only sympathise!