When I go

missile

When I go I want to leave my affairs in order.
I am not interested in hiding my assets to avoid care home charges.
I am not interested in avoiding tax on my estate. It could be circa £500,000.
I have a simple will which shares my estate between two sons who are executors.

I understand settlement of my estate could be simplified and avoid probate delays, if I create a trust?

Thank you for your advice

RAS

Are you single, widowed or divorced, as the sums are different?

poseidon1

missile said:

When I go I want to leave my affairs in order.
I am not interested in hiding my assets to avoid care home charges.
I am not interested in avoiding tax on my estate. It could be circa £500,000.
I have a simple will which shares my estate between two sons who are executors.

I understand settlement of my estate could be simplified and avoid probate delays, if I create a trust?

Thank you for your advice

I assume you mean a trust created during your lifetime whereby your assets are held on life interest trust for yourself with remainder to your children when you pass? This arrangement does indeed bypass probate on death but has serious IHT ramifications.

Since March 2006 all lifetime trusts are 'relevant property settlements' ( a technical IHT term) whereby gifts are chargeable lifetime transfers for IHT purposes.
 It matters not that you are settling the trust on yourself as the intial primary beneficiary. If the value gifted into trust exceeds your nil rate band the excess is chargeable at the lifetime IHT rates of 20%  ( in your case 20% of £175k).

However this gets worse, if you survive to the 10th anniversary of the trust, there is a further 6% IHT charge on excess value exceeding the trust's NRB. This charge recurs every 10 years.

At present your £500k estate  probably incurs no IHT on death, due to combination of  NRB and RNRB. Are you prepared to pay unnecessary IHT during your lifetime in exchange for the dubious 'benefit' of your sons avoiding probate procedures on death?  

vacheron

When I go I want to leave my affairs in order.
I am not interested in hiding my assets to avoid care home charges.
I am not interested in avoiding tax on my estate. It could be circa £500,000.
I have a simple will which shares my estate between two sons who are executors.

I understand settlement of my estate could be simplified and avoid probate delays, if I create a trust?

Thank you for your advice

This line may be a little ambiguous.
Do you mean your estate could be worth c. £500,000 or that you anticipate the tax on your estate to be c. £500,000? 

missile

RAS said:

Are you single, widowed or divorced, as the sums are different?

I am a Widower

missile

poseidon1 said:

missile said:

When I go I want to leave my affairs in order.
I am not interested in hiding my assets to avoid care home charges.
I am not interested in avoiding tax on my estate. It could be circa £500,000.
I have a simple will which shares my estate between two sons who are executors.

I understand settlement of my estate could be simplified and avoid probate delays, if I create a trust?

Thank you for your advice

I assume you mean a trust created during your lifetime whereby your assets are held on life interest trust for yourself with remainder to your children when you pass? This arrangement does indeed bypass probate on death but has serious IHT ramifications.

Since March 2006 all lifetime trusts are 'relevant property settlements' ( a technical IHT term) whereby gifts are chargeable lifetime transfers for IHT purposes.
 It matters not that you are settling the trust on yourself as the initial primary beneficiary. If the value gifted into trust exceeds your nil rate band the excess is chargeable at the lifetime IHT rates of 20%  ( in your case 20% of £175k).

However this gets worse, if you survive to the 10th anniversary of the trust, there is a further 6% IHT charge on excess value exceeding the trust's NRB. This charge recurs every 10 years.

At present your £500k estate  probably incurs no IHT on death, due to combination of  NRB and RNRB. Are you prepared to pay unnecessary IHT during your lifetime in exchange for the dubious 'benefit' of your sons avoiding probate procedures on death?  

Many thanks for your comprehensive response.
It would seem that in my case, a trust would be a very bad idea.

missile

vacheron said:

When I go I want to leave my affairs in order.
I am not interested in hiding my assets to avoid care home charges.
I am not interested in avoiding tax on my estate. It could be circa £500,000.
I have a simple will which shares my estate between two sons who are executors.

I understand settlement of my estate could be simplified and avoid probate delays, if I create a trust?

Thank you for your advice

This line may be a little ambiguous.
Do you mean your estate could be worth c. £500,000 or that you anticipate the tax on your estate to be c. £500,000? 

I estimate my estate is currently worth at least conservatively £500,000 & possibly £600,000 depending on property market.

RAS

missile said:

RAS said:

Are you single, widowed or divorced, as the sums are different?

I am a Widower

So unless your spouse left money to other people than you, you have their spousal non residential allowance and if they were on the deeds of this or a previous house their residential allowance.

So potentially an IHT allowance of £1m if you leave your wealth to your children or grandchildren, which is probably ample even if the house values rockets.

poseidon's explained why this sort of trust complicates things. Add to that the fact that there probably will be no IHT to pay and if your estate is less than £650k your executors don't even need to do an IHT return. 

Just let your executors get on with the job. Have little electronic and paper files (When I die) which contains copies of all your account details including utilities, banking, savings and media. Elsewhere make sure they know how to find and access that, and know your preferred funeral arrangements and where your will is kept. Edit out old stuff at least once a year.

I'd suggest keeping the will with the HMCTS scheme for a one off payment given how difficult people find tracking down legal firms who've closed and even worse will-writers who've gone out of business.

missile

RAS said:

missile said:

RAS said:

Are you single, widowed or divorced, as the sums are different?

I am a Widower

So unless your spouse left money to other people than you, you have their spousal non residential allowance and if they were on the deeds of this or a previous house their residential allowance.

So potentially an IHT allowance of £1m if you leave your wealth to your children or grandchildren, which is probably ample even if the house values rockets.

poseidon's explained why this sort of trust complicates things. Add to that the fact that there probably will be no IHT to pay and if your estate is less than £650k your executors don't even need to do an IHT return. 

Just let your executors get on with the job. Have little electronic and paper files (When I die) which contains copies of all your account details including utilities, banking, savings and media. Elsewhere make sure they know how to find and access that, and know your preferred funeral arrangements and where your will is kept. Edit out old stuff at least once a year.

I'd suggest keeping the will with the HMCTS scheme for a one off payment given how difficult people find tracking down legal firms who've closed and even worse will-writers who've gone out of business.

Many thanks for your comments.

I was aware that it is unlikely that my kids would be liable for IHT.
I had read on a.n.other site several people with delays of up to 9 years for probate and recommending a trust to avoid this. I guess they have complications e.g. a poorly drafted will, squabbles over inheritance or whatever.

I have a RED file with details of my finances and original will. My beneficiaries and solicitor have copies. 
So I think I am good to go(?) but hopefully not soon.

missile

RAS said:

I'd suggest keeping the will with the HMCTS scheme for a one off payment given how difficult people find tracking down legal firms who've closed and even worse will-writers who've gone out of business.

I google HMCTS scheme:
The HMCTS Membership Scheme is a membership scheme that permits enhanced access through security in HMCTS buildings for registered holders with the appropriate scheme ID. The scheme is run by HM Courts and Tribunal Service (HMCTS) and the Bar Council. The scheme is intended to reduce the time barristers and other professional court users spend passing through security at courts. To join the scheme, you can visit the CLSA website and register as an individual member or a firm member

Please be advised; my will is on the National Wills Register.

boingy

missile said:

RAS said:

missile said:

RAS said:

Are you single, widowed or divorced, as the sums are different?

I am a Widower

So unless your spouse left money to other people than you, you have their spousal non residential allowance and if they were on the deeds of this or a previous house their residential allowance.

So potentially an IHT allowance of £1m if you leave your wealth to your children or grandchildren, which is probably ample even if the house values rockets.

poseidon's explained why this sort of trust complicates things. Add to that the fact that there probably will be no IHT to pay and if your estate is less than £650k your executors don't even need to do an IHT return. 

Just let your executors get on with the job. Have little electronic and paper files (When I die) which contains copies of all your account details including utilities, banking, savings and media. Elsewhere make sure they know how to find and access that, and know your preferred funeral arrangements and where your will is kept. Edit out old stuff at least once a year.

I'd suggest keeping the will with the HMCTS scheme for a one off payment given how difficult people find tracking down legal firms who've closed and even worse will-writers who've gone out of business.

Many thanks for your comments.

I was aware that it is unlikely that my kids would be liable for IHT.
I had read on a.n.other site several people with delays of up to 9 years for probate and recommending a trust to avoid this. I guess they have complications e.g. a poorly drafted will, squabbles over inheritance or whatever.

I have a RED file with details of my finances and original will. My beneficiaries and solicitor have copies. 
So I think I am good to go(?) but hopefully not soon.

I think you've already done more than 95% of people do in terms of planning. A simple will and your RED folder will be much appreciated by your sons. Don't go anywhere near a trust - it will add expense and complexity where it is not needed.

Apart from keeping that folder up to date, just forget the rest of it and enjoy life!