Will / trust

Skint_yet_Again

My dad has recently passed away and I am confused about the will. 

Mum and dad had mirror wills. They were tenants in common. 

Mum died in 2018 and left her share of the home in trust for 3 daughters (all over 18 / left home) with dad having a life interest to remain living in the property. Her residuary estate passed to dad. No IHT to pay. 

Dad has now passed away. We have been told mums trust has ended. We will seek legal help to register the trust and pay any iht / cgt. The property will be sold. 

Dads residuary estate is left to his trustees to sell and after debts / funeral expenses hold upon trust for 3 daughters (who are also named as trustees, executors and beneficiaries) with the right to raise the shares and pay for the advancement maintenance education or otherwise howsoever for the benefit of such beneficiary. 

Can we each keep a few items, sell or dispose of the rest and eventually split the proceeds together with the rest of the money from the estate between the three of us (after debts / funeral expenses /selling house & car / taxes)? We have been told (free legal advice phone line) this doesn’t create a second trust and is common practice/ wording in wills? 

We are currently in the process of valuing the estate and hoping to be exempt from IHT. We will seek legal advice but we are unsure whether to use a large company claiming to have “extensive knowledge” of estate/ trust/ IHT or a small local company and hope they know what they are doing? 

Any advice gratefully received. Things are very raw right now and I feel like I’m clawing my way through treacle so please be patient 

jackieblack

I’m sorry for your loss and understand how overwhelming this feels- I’ve been executor for both my parents estates in the last 16 months, after losing them 8 1/2 months apart

Yes, completely standard wording

I would guess from the wording that the wills were made at a time when at least one of you/your siblings were school age, that’s no longer relevant so you can ignore that. Your father’s will is also worded for the possibility that he would die first, so that part is also no longer relevant.

Yes, you can all keep whatever you like provided those items have not been left specifically to anyone else, but you should all agree on who keeps what and the value taken into account in the final distribution. If you are just talking trinkets with sentimental rather than monetary value then it’s not an issue. If one person wants to keep items of significantly greater monetary value than the others then they should get less cash so that the entire estate (after debts/expenses) is shared equally, per the will.

 I hope it all goes smoothly for you 

Skint_yet_Again

Thank you so much @jackieblack for stopping by to help, it is greatly appreciated. I am sorry to hear about your loss with both your parents passing. I am trying not to let all this overwhelm me 🤯 I always thought I was fairly intelligent but looking at IHT and trusts is beyond me. Best wishes to you 

Skint_yet_Again

Can anyone advise what the limits are for IHT for dad as I have seen so many different figures. I understand the £325k. We are currently working out the value of the estate and adding back larger gifts over £3k per year (not including smaller gifts under £250)

Half the house was in trust. Does the limit increase to 500k if dads share of the house is left to his children. If dads share of house is around £100k does that reduce the limit? ie. £325 + £value of 1/2 property. 

Can we carry over any unused £325k from mum to dad if needed?  

Just trying to get an idea of what’s going on before seeing a solicitor for the trust and hoping to do probate ourselves. 

Keep_pedalling

Skint_yet_Again said:

Can anyone advise what the limits are for IHT for dad as I have seen so many different figures. I understand the £325k. We are currently working out the value of the estate and adding back larger gifts over £3k per year (not including smaller gifts under £250)

Half the house was in trust. Does the limit increase to 500k if dads share of the house is left to his children. If dads share of house is around £100k does that reduce the limit? ie. £325 + £value of 1/2 property. 

Can we carry over any unused £325k from mum to dad if needed?  

Just trying to get an idea of what’s going on before seeing a solicitor for the trust and hoping to do probate ourselves. 

Your mother’s will created an immediate post death interest trust and although legal ownership of her share of the house passed to the trust, beneficial ownership passed to your father. Assuming they were married or in a civil partnership this would have ment this bequest would be subject to spousal exemption and would not have used any of her NRB up and for IHT purposes the whole house forms part of your father’s estate.

If none of her NRB was used up on any other bequests or non exempt gifts in the last 7 years of her life then you will have £1M of exemptions that can be applied to his estate. If his total estate is over £500k but less than £650k then you should be able to get away without doing an IHT return by only clamping his NRB and the transferable NRB from your mother’s estate.

You should be able to apply for probate yourselves, but you may find it subject to HNRC penalties for failing to register the trust earlier.

RAS

It was actually your mum's trust that needed to be registered with HMRC. That ceased to exist when dad died.

This legislation came into force in 2022, so your family may not have realised it affected you. But you need to register it retrospectively if dad didn't and expect penalties.

The other reference to trustees is that executors always hold the assets of the estate in trust until it is distributed.

There will be no CGT to pay if the estate does not increase in value between death and the sale of assets. Ask three local EAs to price initially and maybe come back, when you understand.

As K_p explains if the house is valued £350k or more, there is a £1m IHT exemption, although you need to allow for large gifts within the last 7 years.
Unless you've got family fall out, it easy enough to do probate yourselves and generally quicker. Do check which bank and savings accounts have limits high enough not to need probate, as they can be gathered and used to fund expenses prior to probate.

Regarding stuff in the house, this generally has a nominal value, £500-£1k unless there are expensive collections or pictures etc.

Best thing is to ask siblings to list separately anything they would like, then meet up. Those that are only wanted by one person go to them, those wanted by more than one are negotiated, perhaps with the understanding that it reverts to the other person if the one who takes it decides they don't want it (take financial value out of the equation).  

You'll end up giving a lot to charity. Worth looking up Emmaus, BHF, local hospice charities and recycling/renewal schemes for furniture. It impossible to get rid of soft furniture without fire labels but it might go on freecycle. 

Skint_yet_Again

Thank you @Keep_pedalling I did wonder if there would be penalties for not registering the trust but we (dad as executor with me helping) took legal advice (Which? Legal advice line) at the time and were told we did not need to register it. Can we appeal any penalty? I don’t have anything in writing just my notes of the phone conversation. That’s probably not a reasonable excuse? Mum passed away very suddenly and unexpectedly on holiday abroad with dad so it was a devastating time. Dad fell very ill shortly after with sepsis and nearly died. 

Dad & I took legal advice & probate office advice to help dad complete probate forms for mum  so I’m wondering now if we did mums correctly. How would we transfer NRB from mum to dad. I had been working on the assumption that only half the house value would be included for dad’s probate/ IHT. I feel a large solicitor bill coming on… 

poseidon1

Skint_yet_Again said:

Thank you @Keep_pedalling I did wonder if there would be penalties for not registering the trust but we (dad as executor with me helping) took legal advice (Which? Legal advice line) at the time and were told we did not need to register it. Can we appeal any penalty? I don’t have anything in writing just my notes of the phone conversation. That’s probably not a reasonable excuse? Mum passed away very suddenly and unexpectedly on holiday abroad with dad so it was a devastating time. Dad fell very ill shortly after with sepsis and nearly died. 

Dad & I took legal advice & probate office advice to help dad complete probate forms for mum  so I’m wondering now if we did mums correctly. How would we transfer NRB from mum to dad. I had been working on the assumption that only half the house value would be included for dad’s probate/ IHT. I feel a large solicitor bill coming on… 

Let's get some specific numbers here to help minimise the task you have ahead of you:

* What is the total estimated value of the house, ie is it above or below £350,000?

* What is the total of your father's remaining personal assets ( not including his share of the house) ie cash at bank, ISAs, any investments etc.

* As for personal chattels in the home, are there any valuable antiques, art, jewellery, collectibles? If there are only the usual household items such as TV, white goods, modern furniture you can usually get away with a notional value of one or two thousand pounds depending on condition.

Supplying some real numbers for the above, will dictate whether applying for probate may be complicated by having to do an IHT return.

RAS

Skint_yet_Again said:

Thank you @Keep_pedalling I did wonder if there would be penalties for not registering the trust but we (dad as executor with me helping) took legal advice (Which? Legal advice line) at the time and were told we did not need to register it. Can we appeal any penalty? I don’t have anything in writing just my notes of the phone conversation. That’s probably not a reasonable excuse? Mum passed away very suddenly and unexpectedly on holiday abroad with dad so it was a devastating time. Dad fell very ill shortly after with sepsis and nearly died. 

Dad & I took legal advice & probate office advice to help dad complete probate forms for mum  so I’m wondering now if we did mums correctly. How would we transfer NRB from mum to dad. I had been working on the assumption that only half the house value would be included for dad’s probate/ IHT. I feel a large solicitor bill coming on… 

The advice you were given at the time was correct.

The law changed in 2020 and there was a lot of media coverage about the need to register existing trusts by September 2022. 

In the same situation now, IPDI trusts have to be registered with 2 years of death if the spouse survives, other within 90 days.

Skint_yet_Again

Thanks @poseidon1 and @RAS as soon as I have some figures I will come back. Estate agents booked for valuation (under £200k would expect £160-£180k total including trust share) savings £150k ish waiting for statements/ ISAS, contents no real collectables have been checking eBay nothing over £100 ish. Car = just about to get quotes from auto trader/ we buy ani car & motor way. (7,000 ish). Do expenses for solicitors/ tax come off to reach the total figure or is it gross amount? 

RAS sorry I missed your post earlier. Yes we missed the change in 2022 requiring us to register the trust. We were expecting to pay CGT as house has increased a lot due to house market going up since 2018 when mums trust was created. 

Keep_pedalling

An IPDI trusts avoids any CGT liability, where the life tenant is a spouse.