Post Death Interest Trust

Archiedextrous56

Good afternoon, I am hoping that someone with knowledge of Will trusts may be able be to offer some provisional guidance. My Mother in Law has left 50% of her property in a PDIT for her 3 children. Husband has been left a life interest and the Will stipulates the following.....

i) ("the Occupant") may live in my house and use it as his principal place of residence for as long as he wishes and without charge provided that he pays all rates and outgoings and keeps my house in good repair and insured to the satisfaction of my Trustees.

ii) Until the Occupant has in the opinion of my Trustees ceased to be entitled under paragraph (i) hereof to use my house as his principal place of residence it shall not be sold without his consent or in the event of the mental incapacity of the Occupant the written consent of his Court of Protection Deputy acting under a Deputyship Order or his Attorney under a Registered Enduring or Lasting Power of Attorney.

iii) At the request of the Occupant my Trustees may sell my house and buy another one to which the provisions of this clause shall apply.

iv) In purchasing a replacement in accordance with this clause my Trustees may join with any person in purchasing an undivided share of the land.

v) To divide and pay any surplus arising from the sale and purchase in accordance with the provisions of sub clause (vi) below.

vi) When this trust ends my Trustees shall hold my house as part of my residuary estate.

And now for my question....

1. Do the stipulations in the Will permit Father in law (trustee) to buy back the 50% share which is currently held in the Trust? 
My interpretation is that it only allows him the option to purchase another property, not purchase the 50% Trust share back, however I would welcome the wealth of knowledge from others.

Many thanks in advance.

Keep_pedalling

I can see no reason why he can’t buy out the trusts share and distribute the proceeds to the remaindermen.

How long ago did she die?

Archiedextrous56

Keep_pedalling said:

I can see no reason why he can’t buy out the trusts share and distribute the proceeds to the remaindermen.

How long ago did she die?

On what grounds would he buy it out? She died about 12 months ago.

poseidon1

Archiedextrous56 said:

Good afternoon, I am hoping that someone with knowledge of Will trusts may be able be to offer some provisional guidance. My Mother in Law has left 50% of her property in a PDIT for her 3 children. Husband has been left a life interest and the Will stipulates the following.....

i) ("the Occupant") may live in my house and use it as his principal place of residence for as long as he wishes and without charge provided that he pays all rates and outgoings and keeps my house in good repair and insured to the satisfaction of my Trustees.

ii) Until the Occupant has in the opinion of my Trustees ceased to be entitled under paragraph (i) hereof to use my house as his principal place of residence it shall not be sold without his consent or in the event of the mental incapacity of the Occupant the written consent of his Court of Protection Deputy acting under a Deputyship Order or his Attorney under a Registered Enduring or Lasting Power of Attorney.

iii) At the request of the Occupant my Trustees may sell my house and buy another one to which the provisions of this clause shall apply.

iv) In purchasing a replacement in accordance with this clause my Trustees may join with any person in purchasing an undivided share of the land.

v) To divide and pay any surplus arising from the sale and purchase in accordance with the provisions of sub clause (vi) below.

vi) When this trust ends my Trustees shall hold my house as part of my residuary estate.

And now for my question....

1. Do the stipulations in the Will permit Father in law (trustee) to buy back the 50% share which is currently held in the Trust? 
My interpretation is that it only allows him the option to purchase another property, not purchase the 50% Trust share back, however I would welcome the wealth of knowledge from others.

Many thanks in advance.

There is nothing in trust law preventing  the Remaindermen contracting to sell their interest in remainder to the life tenant ( or anyone else) unless this is specifically barred by the trust document ( does not appear to be the case here).

If the Life tenant is prepared to buy out the Remaindermen's 50% stake for full value ( with no discount applied), this is something very much worth considering since this would accelerate receipt of your mother's inheritance, and avoid the potential for an inheritance tax deduction if the Life tenant's own assets plus the trust, exceeds available nil rate bands on his death.

So the key question is, is he prepared to sell for full 50% market value of the house, or a discounted figure that recognises you and fellow remaindermen would be receiving inheritance far sooner than would ordinarily be expected?

In this regard you will find the following thread of specific interest, where a similar question was raised  -

https://forums.moneysavingexpert.com/discussion/comment/81554628#Comment_81554628

As you will see that OP was very unhappy with the life tenant's buy out offer, so in all likelihood will curtail discussions in his case.

In your case the life tenant can make the offer but you have no need to accept unless the deal on offer is to your advantage  and  effectively offers you a premium over the actuarial value of his life interest. If you read the above thread carefully you will understand the actuarial considerations at play here.

Odd how this relatively unusual scenario ( Remaindermen buy out offers) has occured twice in close succession on this forum.

Makes me wonder if this is becoming a bit of thing, especially in blended family situations where the 'blend' is proving less than harmonious.

Keep_pedalling

Archiedextrous56 said:

Keep_pedalling said:

I can see no reason why he can’t buy out the trusts share and distribute the proceeds to the remaindermen.

How long ago did she die?

On what grounds would he buy it out? She died about 12 months ago.

Maybe he would just like the flexibility of having outright ownership. If he has the finances to buy the whole house then he does not need the security a IPDIT provides a surviving spouse. In his position I would do the same. 

If would also benefit the remaindermen as that would not have to wait many years for their inheritance. 

Archiedextrous56

poseidon1 said:

Archiedextrous56 said:

Good afternoon, I am hoping that someone with knowledge of Will trusts may be able be to offer some provisional guidance. My Mother in Law has left 50% of her property in a PDIT for her 3 children. Husband has been left a life interest and the Will stipulates the following.....

i) ("the Occupant") may live in my house and use it as his principal place of residence for as long as he wishes and without charge provided that he pays all rates and outgoings and keeps my house in good repair and insured to the satisfaction of my Trustees.

ii) Until the Occupant has in the opinion of my Trustees ceased to be entitled under paragraph (i) hereof to use my house as his principal place of residence it shall not be sold without his consent or in the event of the mental incapacity of the Occupant the written consent of his Court of Protection Deputy acting under a Deputyship Order or his Attorney under a Registered Enduring or Lasting Power of Attorney.

iii) At the request of the Occupant my Trustees may sell my house and buy another one to which the provisions of this clause shall apply.

iv) In purchasing a replacement in accordance with this clause my Trustees may join with any person in purchasing an undivided share of the land.

v) To divide and pay any surplus arising from the sale and purchase in accordance with the provisions of sub clause (vi) below.

vi) When this trust ends my Trustees shall hold my house as part of my residuary estate.

And now for my question....

1. Do the stipulations in the Will permit Father in law (trustee) to buy back the 50% share which is currently held in the Trust? 
My interpretation is that it only allows him the option to purchase another property, not purchase the 50% Trust share back, however I would welcome the wealth of knowledge from others.

Many thanks in advance.

There is nothing in trust law preventing  the Remaindermen contracting to sell their interest in remainder to the life tenant ( or anyone else) unless this is specifically barred by the trust document ( does not appear to be the case here).

If the Life tenant is prepared to buy out the Remaindermen's 50% stake for full value ( with no discount applied), this is something very much worth considering since this would accelerate receipt of your mother's inheritance, and avoid the potential for an inheritance tax deduction if the Life tenant's own assets plus the trust, exceeds available nil rate bands on his death.

So the key question is, is he prepared to sell for full 50% market value of the house, or a discounted figure that recognises you and fellow remaindermen would be receiving inheritance far sooner than would ordinarily be expected?

In this regard you will find the following thread of specific interest, where a similar question was raised  -

https://forums.moneysavingexpert.com/discussion/comment/81554628#Comment_81554628

As you will see that OP was very unhappy with the life tenant's buy out offer, so in all likelihood will curtail discussions in his case.

In your case the life tenant can make the offer but you have no need to accept unless the deal on offer is to your advantage  and  effectively offers you a premium over the actuarial value of his life interest. If you read the above thread carefully you will understand the actuarial considerations at play here.

Odd how this relatively unusual scenario ( Remaindermen buy out offers) has occured twice in close succession on this forum.

Makes me wonder if this is becoming a bit of thing, especially in blended family situations where the 'blend' is proving less than harmonious.

Apologies for the delay in response to your kind reply. Your insights and the link provided has been very useful and directly relevant to the situation I am in. I recently met with FIL who has taken legal advice and says there will be no implications with IT or CGT liability if the Trust is terminated early. I also suspect he has consulted with a few estate agents on the potential value of the property. Unfortunately, I am somewhat cautious as relations are not that great. I don’t want to waste money on getting legal advice if he is just going to mess us about with a silly offer to buy back 50% of the Trust. Im am inclined to ask him to be upfront with a realistic offer in the first instance and we can negotiate from there.
Regards
Archie

poseidon1

Archiedextrous56 said:

poseidon1 said:

Archiedextrous56 said:

Good afternoon, I am hoping that someone with knowledge of Will trusts may be able be to offer some provisional guidance. My Mother in Law has left 50% of her property in a PDIT for her 3 children. Husband has been left a life interest and the Will stipulates the following.....

i) ("the Occupant") may live in my house and use it as his principal place of residence for as long as he wishes and without charge provided that he pays all rates and outgoings and keeps my house in good repair and insured to the satisfaction of my Trustees.

ii) Until the Occupant has in the opinion of my Trustees ceased to be entitled under paragraph (i) hereof to use my house as his principal place of residence it shall not be sold without his consent or in the event of the mental incapacity of the Occupant the written consent of his Court of Protection Deputy acting under a Deputyship Order or his Attorney under a Registered Enduring or Lasting Power of Attorney.

iii) At the request of the Occupant my Trustees may sell my house and buy another one to which the provisions of this clause shall apply.

iv) In purchasing a replacement in accordance with this clause my Trustees may join with any person in purchasing an undivided share of the land.

v) To divide and pay any surplus arising from the sale and purchase in accordance with the provisions of sub clause (vi) below.

vi) When this trust ends my Trustees shall hold my house as part of my residuary estate.

And now for my question....

1. Do the stipulations in the Will permit Father in law (trustee) to buy back the 50% share which is currently held in the Trust? 
My interpretation is that it only allows him the option to purchase another property, not purchase the 50% Trust share back, however I would welcome the wealth of knowledge from others.

Many thanks in advance.

There is nothing in trust law preventing  the Remaindermen contracting to sell their interest in remainder to the life tenant ( or anyone else) unless this is specifically barred by the trust document ( does not appear to be the case here).

If the Life tenant is prepared to buy out the Remaindermen's 50% stake for full value ( with no discount applied), this is something very much worth considering since this would accelerate receipt of your mother's inheritance, and avoid the potential for an inheritance tax deduction if the Life tenant's own assets plus the trust, exceeds available nil rate bands on his death.

So the key question is, is he prepared to sell for full 50% market value of the house, or a discounted figure that recognises you and fellow remaindermen would be receiving inheritance far sooner than would ordinarily be expected?

In this regard you will find the following thread of specific interest, where a similar question was raised  -

https://forums.moneysavingexpert.com/discussion/comment/81554628#Comment_81554628

As you will see that OP was very unhappy with the life tenant's buy out offer, so in all likelihood will curtail discussions in his case.

In your case the life tenant can make the offer but you have no need to accept unless the deal on offer is to your advantage  and  effectively offers you a premium over the actuarial value of his life interest. If you read the above thread carefully you will understand the actuarial considerations at play here.

Odd how this relatively unusual scenario ( Remaindermen buy out offers) has occured twice in close succession on this forum.

Makes me wonder if this is becoming a bit of thing, especially in blended family situations where the 'blend' is proving less than harmonious.

Apologies for the delay in response to your kind reply. Your insights and the link provided has been very useful and directly relevant to the situation I am in. I recently met with FIL who has taken legal advice and says there will be no implications with IT or CGT liability if the Trust is terminated early. I also suspect he has consulted with a few estate agents on the potential value of the property. Unfortunately, I am somewhat cautious as relations are not that great. I don’t want to waste money on getting legal advice if he is just going to mess us about with a silly offer to buy back 50% of the Trust. Im am inclined to ask him to be upfront with a realistic offer in the first instance and we can negotiate from there.
Regards
Archie

I think that sounds like an entirely  reasonable approach.

Until you have accurate data on current value of the home, and what the FIL is prepared to offer to buy out the remaindermen, there is nothing ( yet) to justify you as trustee seeking legal advice.

In the meantime, you could have some thoughts on how much of a discount on the house value you feel would be reasonable to justify breaking the trust early in favour of all concerned.

The fact that you are not on great terms with FIL, is a potential factor dictating a possible parting of the ways but not at an unreasonable discount factor.  You as trustee have a legal duty to the remaindermen in this regard.

Archiedextrous56

poseidon1 said:

Archiedextrous56 said:

poseidon1 said:

Archiedextrous56 said:

Good afternoon, I am hoping that someone with knowledge of Will trusts may be able be to offer some provisional guidance. My Mother in Law has left 50% of her property in a PDIT for her 3 children. Husband has been left a life interest and the Will stipulates the following.....

i) ("the Occupant") may live in my house and use it as his principal place of residence for as long as he wishes and without charge provided that he pays all rates and outgoings and keeps my house in good repair and insured to the satisfaction of my Trustees.

ii) Until the Occupant has in the opinion of my Trustees ceased to be entitled under paragraph (i) hereof to use my house as his principal place of residence it shall not be sold without his consent or in the event of the mental incapacity of the Occupant the written consent of his Court of Protection Deputy acting under a Deputyship Order or his Attorney under a Registered Enduring or Lasting Power of Attorney.

iii) At the request of the Occupant my Trustees may sell my house and buy another one to which the provisions of this clause shall apply.

iv) In purchasing a replacement in accordance with this clause my Trustees may join with any person in purchasing an undivided share of the land.

v) To divide and pay any surplus arising from the sale and purchase in accordance with the provisions of sub clause (vi) below.

vi) When this trust ends my Trustees shall hold my house as part of my residuary estate.

And now for my question....

1. Do the stipulations in the Will permit Father in law (trustee) to buy back the 50% share which is currently held in the Trust? 
My interpretation is that it only allows him the option to purchase another property, not purchase the 50% Trust share back, however I would welcome the wealth of knowledge from others.

Many thanks in advance.

There is nothing in trust law preventing  the Remaindermen contracting to sell their interest in remainder to the life tenant ( or anyone else) unless this is specifically barred by the trust document ( does not appear to be the case here).

If the Life tenant is prepared to buy out the Remaindermen's 50% stake for full value ( with no discount applied), this is something very much worth considering since this would accelerate receipt of your mother's inheritance, and avoid the potential for an inheritance tax deduction if the Life tenant's own assets plus the trust, exceeds available nil rate bands on his death.

So the key question is, is he prepared to sell for full 50% market value of the house, or a discounted figure that recognises you and fellow remaindermen would be receiving inheritance far sooner than would ordinarily be expected?

In this regard you will find the following thread of specific interest, where a similar question was raised  -

https://forums.moneysavingexpert.com/discussion/comment/81554628#Comment_81554628

As you will see that OP was very unhappy with the life tenant's buy out offer, so in all likelihood will curtail discussions in his case.

In your case the life tenant can make the offer but you have no need to accept unless the deal on offer is to your advantage  and  effectively offers you a premium over the actuarial value of his life interest. If you read the above thread carefully you will understand the actuarial considerations at play here.

Odd how this relatively unusual scenario ( Remaindermen buy out offers) has occured twice in close succession on this forum.

Makes me wonder if this is becoming a bit of thing, especially in blended family situations where the 'blend' is proving less than harmonious.

Apologies for the delay in response to your kind reply. Your insights and the link provided has been very useful and directly relevant to the situation I am in. I recently met with FIL who has taken legal advice and says there will be no implications with IT or CGT liability if the Trust is terminated early. I also suspect he has consulted with a few estate agents on the potential value of the property. Unfortunately, I am somewhat cautious as relations are not that great. I don’t want to waste money on getting legal advice if he is just going to mess us about with a silly offer to buy back 50% of the Trust. Im am inclined to ask him to be upfront with a realistic offer in the first instance and we can negotiate from there.
Regards
Archie

I think that sounds like an entirely  reasonable approach.

Until you have accurate data on current value of the home, and what the FIL is prepared to offer to buy out the remaindermen, there is nothing ( yet) to justify you as trustee seeking legal advice.

In the meantime, you could have some thoughts on how much of a discount on the house value you feel would be reasonable to justify breaking the trust the trust early in favour of all concerned.

The fact that you are not on great terms with FIL, is a potential factor dictating a possible parting of the ways but not at an unreasonable discount factor.  You as trustee have a legal duty to the remaindermen in this regard.

Thank you very much for your thoughtful reply. Much appreciated.