What powers do trustees have?

rickyroma

Me and my partner have wills. Our home is mortgage free and we are tenants in common with the land registry. 
 Both wills are identical and have 2 beneficiaries.....my son and my partners son. Trustees are my partners son and her sister. 
 On the death of either of us I believe their estate (50% of what we have including property ) will be held in trust for the beneficiaries and a new bank account will be created for this purpose. 
 The only potential problem is that if my partner dies how much control of the finances would her sister have as a trustee?   On the new account would she be a joint account holder or would this just be the beneficiaries? 
 Also, if I were to survive my partner and wanted to downsize to free up some money to make life easier.... Could my partners sister continually put a block on anything I plan to do just because she disagrees with my plans? 

 

Keep_pedalling

It sounds like you don’t really understand what your will actually do on your death. It sounds like it creates an immediate post death interest trust (IPDIT) so if you die first your share of the house goes into the trust and your partner has the right to live there for life. Your other assets also go in to trust and your partner will be entitled to any income from the trust but the capital will go to your child on your partners death. The trustees cannot distribute any of the capital to your partner.

Putting your share of your home into a IPDIT is quite a normal and sensible thing to do with blended families, but putting your other assets in is not and is going to be quite burdensome for the trustees as they are going to have to deal with the tax issues that arise from the income arising from the trust. If your partner does not need the income from your other assets it would probable better not to include those assets in the trust and just leave them to your children. The same applies to your partner’s will as well.

When you say partner am I correct to assume you are neither married nor in a civil partnership? If that is the case then you should seriously consider changing your marital status, because although IPDITs are very tax efficient for married couples or civil partnership, they are not so if you are not. Without spousal exemption and the transferable NRB, IHT may be payable on the first death and increased levels of IHT on the second death. On top of that CGT is likely to apply to the trust assets on the second death.

Did you have your wills draw up by a will writing company or a solicitor? If the latter was it a STEP qualified solicitor. 

rickyroma

Keep_pedalling said:

It sounds like you don’t really understand what your will actually do on your death. It sounds like it creates an immediate post death interest trust (IPDIT) so if you die first your share of the house goes into the trust and your partner has the right to live there for life. Your other assets also go in to trust and your partner will be entitled to any income from the trust but the capital will go to your child on your partners death. The trustees cannot distribute any of the capital to your partner.

This is correct thanks


"The trustees cannot distribute any of the capital to your partner.". 
I get this yes, but, could the surviving partner access the trust funds to live on (with the trustees agreement) or could a trustee block access to this money? 
 
 Is it possible to leave 50% of just the property to go into trust after the first death, but not any of the savings, pension pots, insurance payout etc as the surviving partner is going to need as much as possible to live on if the are left alone 

Keep_pedalling

rickyroma said:

Keep_pedalling said:

It sounds like you don’t really understand what your will actually do on your death. It sounds like it creates an immediate post death interest trust (IPDIT) so if you die first your share of the house goes into the trust and your partner has the right to live there for life. Your other assets also go in to trust and your partner will be entitled to any income from the trust but the capital will go to your child on your partners death. The trustees cannot distribute any of the capital to your partner.

This is correct thanks


"The trustees cannot distribute any of the capital to your partner.". 
I get this yes, but, could the surviving partner access the trust funds to live on (with the trustees agreement) or could a trustee block access to this money? 
 
 Is it possible to leave 50% of just the property to go into trust after the first death, but not any of the savings, pension pots, insurance payout etc as the surviving partner is going to need as much as possible to live on if the are left alone 

Trustees should follow the terms of the trust, but this does not stop a rouge trustee causing problems and it would be expensive to have them removed which is why you need to select your trustees with care.  The surviving partner should be receiving all the income.

Yes, you could change your will just to leave property in trust and leave the rest as absolute bequests, ho your partner, your son or split it between them.

Bearing in mind that your partner will need as much as possible if you die, you really need to take on board my comments on marriage and IHT especially if your home is worth in excess of £650k which could mean it has to be sold to meet an IHT liability.