House in trust - CGT

kat74

Hoping someone can help or point me to where I can find more information.

Situation is:
Married couple. H died in 2019.
House worth approx £340k at the time. This was the couple's place of residence, and only property.
In H's will, his 50% of the property was put in trust for 2 adult daughters.
No paperwork work was received by daughters, and they were not aware of this trust until recently. Daughters don't think W went through probate as all finances were in joint names.

W lived in the house until 2025 when she moved to a nursing home with dementia (so daughters can't ask her anything about the situation).
W has a good pension and savings and not likely to use her share of the house for her nursing home fees.
.
No recent valuation on the house, but assume it's now worth around £360k. Daughters are clearing the house to sell, but no urgency on this.

Am I right in thinking that CGT will be due, when the house is sold, at each daughter's own tax rate on their share of the 20k increase in the he house? (I.e. £5k increase per daughter)
.
Does it make any difference if the house is sold before or after W dies?

Keep_pedalling

It depends on the sort of trust. If your father’s will gave your mother a the right to live in the home then his will created an immediate post death interest trust, and although the trust would have legal ownership of his share your mother would retain beneficial ownership. 

This would mean the whole house forms part of her estate and there would be no CGT liability. In addition the trust would have not used any of his nil rate band and all of it would be transferable to her estate. 

poseidon1

kat74 said:

Hoping someone can help or point me to where I can find more information.

Situation is:
Married couple. H died in 2019.
House worth approx £340k at the time. This was the couple's place of residence, and only property.
In H's will, his 50% of the property was put in trust for 2 adult daughters.
No paperwork work was received by daughters, and they were not aware of this trust until recently. Daughters don't think W went through probate as all finances were in joint names.

W lived in the house until 2025 when she moved to a nursing home with dementia (so daughters can't ask her anything about the situation).
W has a good pension and savings and not likely to use her share of the house for her nursing home fees.
.
No recent valuation on the house, but assume it's now worth around £360k. Daughters are clearing the house to sell, but no urgency on this.

Am I right in thinking that CGT will be due, when the house is sold, at each daughter's own tax rate on their share of the 20k increase in the he house? (I.e. £5k increase per daughter)
.
Does it make any difference if the house is sold before or after W dies?

Daughters need to get hold of the Will since that is the operative 'paperwork' for the trust. That should precisely state who are the trustees ( the daughters? ) and the extent of mother's trust beneficial entitlement. 

 As intimated by Keep_pedalling the usual format of these trusts are to  immediately benefit the spouse ( not the children), and if the will has been properly drafted along these lines they is no CGT on the property sale either on the Widow's personal half share or the share held by the trustees.

If a copy of the Will can be located and a redacted version posted here, we can confirm ( or not)  the CGT outcome of a proposed sale.

kat74

Thanks for the info. 
The will will be in the house somewhere; I'll have to dig it out. I believe it did give mum to right to live in the house, and everything carried on as normal when she was still at home (sister & I didn't even know the trust had been set up).
We've had verbal confirmation form the solicitor that dad's share of the house is in trust but the solicitor hasn't been clear on details. The solicitor is practically retired and pretty flakey at responding to messages.

Now that we're working towards selling the hose (with POA) we don't want to do anything wrong when the time comes!

jackieblack

Was the house owned as Joint Tenants or Tenants in Common?
To be able to leave anyone ‘his 50%’, it would have needed to be the former, but then you say probate wasn’t obtained because everything was in joint names, which indicates the latter… 🤷🏻‍♀️

poseidon1

kat74 said:

Thanks for the info. 
The will will be in the house somewhere; I'll have to dig it out. I believe it did give mum to right to live in the house, and everything carried on as normal when she was still at home (sister & I didn't even know the trust had been set up).
We've had verbal confirmation form the solicitor that dad's share of the house is in trust but the solicitor hasn't been clear on details. The solicitor is practically retired and pretty flakey at responding to messages.

Now that we're working towards selling the hose (with POA) we don't want to do anything wrong when the time comes!

You need the will and the precise wording thereof.

Without this and in view of the  'flaky ' unsubstantiated response from the  solicitor, any further comments on CGT outcomes will be  pure speculation.

Keep_pedalling

Depending on the wording of the will, the proceeds from the sale of the trust’s share of the house may need to stay in trust and the income from the trust going to your mother.

The other question is, has the trust been registered with HMRC?