Family trust confusion! What should we do now?

NorthYorkie

Limeykitty: Do you have a copy of the so-called trust deed? If so we need to see the exact wording (with names redacted). As this act was the start of your difficulty, it is essential to know the precise terms of the trust if any meaningful advice can be given. (The term "family trust" is quite meaningless - it will be either an "interest-in possession" trust or a "discretionary" trust.)

Limeykitty

Thanks all for your replies - much appreciated. I'll try to answer the questions/points raised for completeness.

• We are not married
• We are now on good terms with partner's ex.  No formal financial settlement was ever made, but we believe she has remarried in the interim.  
• When we formed the Trusts, we were led to believe (by the Will-writer) that we were doing the best thing to protect our individual and collective interests in accordance with the Wills that we were writing - he told us that, without Trusts, Wills wouldn't necessarily mean our wishes were followed.  
• Sideways disinheritance was the main concern for both of us; we didn't really believe that partner's ex would actually do anything, but the will-writer focussed on this as one of the primary concerns.
• The Will-writer told us that it was "easy" to change things in the future, e.g if we moved, and that there would just be a small admin fee for doing so.  Like idiots, we took this at face value and didn't explore the actual costs and other implications.
• I don't recall that the Will-writer told us that the Trust would shelter our assets against future care costs (we were 49 and 50 years old when the Trusts were put in place), but I do understand that this has been a prime selling point for such arrangements in the last few years.
• When setting up the Trusts, at no point were we made aware of any tax implications or compliance issues.  @poseidon1, the only reason we now know anything about the NRB etc. is because of recent letters from the Trust company, setting out requirements for the 10 year IHT review - in my original post I was just paraphasing what they had said. 
• One Trust was set up for each of the properties we then owned.  We are both Trustees, along with the Trust company
• They are Discretionary Trusts and it appears that they were recorded with the LR for the two original properties.
• Original property values were similar, so 50/50 split of these assets seemed fair.  I have considerably better pension provisions than partner does, but these were not part of the considerations  
• When we sold the first property, I recall that we had to get some extra paperwork witnessed by an independant solicitor (this was arranged by the solicitor doing the conveyancing as they said they couldn't deal with it - not sure why), but it seems that the Trust itself still exists. 
• When we sold the second property and moved to our current home, we weren't required to get anything else witnessed, we thought the (different) solicitor had dealt with whatever was required.  Seemingly this wasn't the case, hence why one of the options now being presented to us is to reflect the sale and purchase.
• We've had our current home valued by two agents and it's currently worth around £400k.  We are "joint tenants" and there is an outstanding offset mortgage of £35k (fully offset by savings, term expires in just over 3 years).  However, the Trust company states "A desktop valuation of your property has revealed the value is currently below £650k but above £520k". This valuation is clearly BS, but presumably them either covering their !!!!!! or giving them the opportunity to charge us more?!

Right now, we're at the point of not wanting to throw any more money at the problem than is necessary, especially as we really don't understand enough about what we have done.  But given that we don't now own either property that was originally in Trust, what would happen if we do nothing?

I do understand the limitations of the guidance given by Forum respondents, and that the best advice is to instruct a solicitor, but unpicking the situation feels like it could be an expensive can of worms.  So if "do nothing" is a bad idea (and I'm guessing it will be!), the £2k we are being quoted to dismantle the Trusts would seem to be the path of least resistance, albeit an expensive lesson.  

NorthYorkie

Thank you for all this but you haven't answered my question. It is impossible to give a detailed answer about a trust without considering the exact terms of the trust deed itself. All we know is that the trustees are you, your partner and the cowboy outfit that sold you the idea plus that it is discretionary (we have not been told who the discretionary beneficiaries are (though we might guess)
This is a far too complex an issue to be adequately dealt with by means of exchanges on this (or any other forum for that matter). I can only repeat the advice given earlier that you should consult a member of the Society of Trust and Estate Practitioners and provide him/her with copies of all the documentation you have. Yes, it will cost but if you want this whole issue cleared up, then that is the price you will have to pay.

Yorkie1

My parents set up a trust each in 2013. Dad passed away in 2015.

When the 10-year anniversary was approaching, it was decided to bring Mum's trust to an end. This decision was formally minuted by the solicitors before the date of the 10-year anniversary, and therefore no anniversary tax charge became due - HMRC is no longer interested, even if it takes longer than the anniversary date to actually change the ownership of the trust property back to the individual.

My deceased Dad's trust remains in force and a full valuation of all the assets in the trust (investments, 50% of their house) had to be valued. HMRC then issued an invoice, with the amount of IHT charge due.

As part of the valuation for the residential property, we received conflicting advice from the solicitor about whether a RICS valuation was needed, or a drive-by one. In the end, I think it was a drive-by one rather than RICS. We were advised against just relying on estate agent valuations.

Yorkie1

Part of the issue which you might need advice on is a) whether the 10-year anniversary has already been reached; and b) what the terms of the Deed say about cash which is realised on the sale of the property - i.e. whether the cash remains in the trust or not.