Family asset protection trust

poseidon1

Dandylion said:

As far as they’re aware, the will wasn’t lodged anywhere, or the trust registered with HMRC – no paperwork relating to that anyway.

I had a proper look at the trust document to see what was put into it to answer Yorkie1’s question - and realised it doesn’t mention the property at all, just £10! (Hence nothing on land registry title).

So as someone said earlier, it’s the will that brings the house into the trust - which I quoted a bit of before but for ease it says: Absolute Residuary Gift SUBJECT to the trusts DECLARED above my Executors SHALL HOLD my estate for the trustees of THE XXXX FAMILY TRUST absolutely.

So new wills ASAP, and in the meantime shred the lot. I say ASAP but knowing them it’ll take a while, so intestacy would be the better alternative till they get them sorted. 

That clarification is helpful.

What your parents actually set up is called a Pilot Trust - see below

https://uk.practicallaw.thomsonreuters.com/Glossary/UKPracticalLaw/I2501759be8db11e398db8b09b4f043e0?transitionType=Default&contextData=(sc.Default)&firstPage=true

These were trusts set up in anticipation of receiving assets in future either by lifetime gift, or in the present case by way of Will.

This being the case the current wills absolutely must be destroyed to prevent the trust acquiring any assets. With nothing more passing into the Trust ( other than the £10 ) it withers and dies. 

You should strongly encourage the couple to put in place new wills. Dying intestate would not be a  satisfactory outcome, even if the trust is bypassed as result.

Keep_pedalling

As above, revoke the wills immediately by destroying them and make new ones ASAP. 

Pilot trusts for such small estates seem rather OTT. 

Dandylion

Interesting. Is a pilot trust not as bad as where the home is added to a family asset trust?

poseidon1

Dandylion said:

Interesting. Is a pilot trust not as bad as where the home is added to a family asset trust?

Pilot Trusts by definition are a 'nothing' unless and until something is proactively put into them at a later date..

In that respect they are completely benign and harmless, unlike lifetime  transfers of the family home into  family asset trusts.

RAS

poseidon1 said:

Dandylion said:

Interesting. Is a pilot trust not as bad as where the home is added to a family asset trust?

Pilot Trusts by definition are a 'nothing' unless and until something is proactively put into them at a later date..

In that respect they are completely benign and harmless, unlike lifetime  transfers of the family home into  family asset trusts.

Which is presumably why wills putting your relative's assets into the trust could cause major complications.

Who are the executors?

Yorkie1

If the pilot trust already has a nominal £10 in it, does ripping up the will in relation to the property bring the trust to an end without any other trust documents needing to be closed down?

Is there a minimum value that the pilot trust should hold, before it becomes effective? 

madbadrob

Yorkie1 said:

If the pilot trust already has a nominal £10 in it, does ripping up the will in relation to the property bring the trust to an end without any other trust documents needing to be closed down?

Is there a minimum value that the pilot trust should hold, before it becomes effective? 

The trust wouldnt be closed by the documents being torn up but the monies from the house etc on death would then not be pushed into this pilot trust.  Well thats my uneducated take on it all

Rob

Yorkie1

madbadrob said:

Yorkie1 said:

If the pilot trust already has a nominal £10 in it, does ripping up the will in relation to the property bring the trust to an end without any other trust documents needing to be closed down?

Is there a minimum value that the pilot trust should hold, before it becomes effective? 

The trust wouldnt be closed by the documents being torn up but the monies from the house etc on death would then not be pushed into this pilot trust.  Well thats my uneducated take on it all

Rob

Those were my thoughts too. Followed on by wondering whether there is a de minimis level for a trust's contents before it needs to be registered with HMRC and tax reports done etc etc ... (i.e. whether the trust with only £10 in it, needs to be treated in the same way for registration / tax as a much larger trust)

Keep_pedalling

Yorkie1 said:

madbadrob said:

Yorkie1 said:

If the pilot trust already has a nominal £10 in it, does ripping up the will in relation to the property bring the trust to an end without any other trust documents needing to be closed down?

Is there a minimum value that the pilot trust should hold, before it becomes effective? 

The trust wouldnt be closed by the documents being torn up but the monies from the house etc on death would then not be pushed into this pilot trust.  Well thats my uneducated take on it all

Rob

Those were my thoughts too. Followed on by wondering whether there is a de minimis level for a trust's contents before it needs to be registered with HMRC and tax reports done etc etc ... (i.e. whether the trust with only £10 in it, needs to be treated in the same way for registration / tax as a much larger trust)

Pilot trusts created before 6/10/20 which hold no more than £100 do not need to register, if created after that date they need to be registered regardless of how little they hold.

https://www.gov.uk/trusts-taxes/registering-a-trust

The other question is where can you possibly hold such a small amount of money in trust? Where is the OP’s parent’s trust money. 

Dandylion

Replying to the question from RAS about executors - they have named each other (they’re not my parents by the way).

And KP - regarding the £10, I read on a different forum a discussion about this, they were talking about sticking stamps to the value of the £10 on the document! (although not the case here).

Thanks KP for the link about registering. This trust is unlikely to have been registered I think. It seems that if they shred the lot, the worst that can happen if one dies before new wills are made, is being intestate. Which has the effect of the current wills in any case.

Thanks all for your input.