Was a Home Protection Trust Mis-sold?

KarenTracey76a

My parents set up a Home Protection Trust, with themselves, myself and my sister as the Trustees (and now registered owners of their house). This was set up 8 years ago.

It looks as though it is a Discretionary Trust and a Life Interest Trust - so the house is still classed as part of their estate for IHT purposes.

The IHT nil-rate band came into effect just before the Trust was signed. As their estate is currently over £1m (very lucky, I know), this is very valuable to us.

My understanding is that the discretionary nature of this Trust causes their estate to not qualify for the IHT nil-rate band, which was not made clear to my parents when setting this up.

Also, the property includes 2 pockets of adjoining land that are on separate title deeds, but were not included in the Trust. I think that this means that the ability to sell the house will linked to securing Probate.

Am I correct in thinking that this product may have been mis-sold to my parents?

I have asked the Solictors who drew up the Trust for clarification, but they want to charge me/us a significant sum for them to look into it. As it was their product, this feels odd to me.

Any advice most welcome.

Thank you

Keep_pedalling

There are a lot of sharks selling useless trusts that have ended being far from tax savings. I don’t think they have lost the NRB as the downsizing rule can be used for disposals after 8th July 2015.

The transfer will be treated as a gift with reservation of benefit so yes the house still forms part of their estates. I would not trust and company that gave such poor advice, so would look to consult a STEP qualified solicitor to see how feasible it would be to undo this mess. 

KarenTracey76a

Thank you very much.