Wills / Financial Planning

Smidge1524

Retired UK citizen resident in Spain. Property in both countries. Looking for recommendations on financial planning for updating current Will.

Keep_pedalling

You almost certainly need a will for each county. Spanish inheritance rules are rather different from UK ones so professional help should be taken. What is the value of your UK assets.

PS I have asked for this to be moved to the deaths, funerals and property board.

Smidge1524

I already have a Spanish Will for Spanish assets.  Looking for independent help for the UK end.

Smidge1524

My solicitor has told me it is not allowed for me to put my UK property in trust as it looks like I am avoiding potential care costs.  I would like to make some provision for my 4 grandchildren, now in higher education, who will now find it very difficult to get on the housing ladder.

Keep_pedalling

Smidge1524 said:

My solicitor has told me it is not allowed for me to put my UK property in trust as it looks like I am avoiding potential care costs.  I would like to make some provision for my 4 grandchildren, now in higher education, who will now find it very difficult to get on the housing ladder.

What are your long term plans for this house? Are you keeping it in case you have to move back to the UK at some time?

It is unlikely that a trust would be a wise move for tax reasons, but the other problem is that it is difficult to make effective inheritance planning when your wealth is tied up in illiquid assets. 

poseidon1

Smidge1524 said:

My solicitor has told me it is not allowed for me to put my UK property in trust as it looks like I am avoiding potential care costs.  I would like to make some provision for my 4 grandchildren, now in higher education, who will now find it very difficult to get on the housing ladder.

If your solicitor did actually say you are not allowed to place your UK property in a lifetime trust for grandchildren for the reasons stated, that is untrue.  You can merrily proceed with that idea, but if you end up in UK long term care, the LOA could treat the gift as deprivation of capital disregard the trust and treat you as if you still owned the property. Furthermore if property value exceeds £325k NRBs IHT at 20% on excess value. 

Furthermore if it is a property you still use as your home on visits to the UK, without paying a market rent to trustees you are still treated as the property owner for IHT purposes on eventual death (GROB). So you can do it but highly  inadvisable for a host of reasons.

What you can do is have a UK will drafted on the basis that the property is left to your grand children in equal shares on 'trust for sale' on your death ( ie they would be entitled to sale proceeds rather than house itself).

A Perfectly acceptable piece of estate planning which preserves your £175k residence nil rate band and £325k NRB and ensures your grandchildren inherit in due course. However IHT to pay if estate exceeds available NRBs.

Keep_pedalling

poseidon1 said:

Smidge1524 said:

My solicitor has told me it is not allowed for me to put my UK property in trust as it looks like I am avoiding potential care costs.  I would like to make some provision for my 4 grandchildren, now in higher education, who will now find it very difficult to get on the housing ladder.

If your solicitor did actually say you are not allowed to place your UK property in a lifetime trust for grandchildren for the reasons stated, that is untrue.  You can merrily proceed with that idea, but if you end up in UK long term care, the LOA could treat the gift as deprivation of capital disregard the trust and treat you as if you still owned the property. Furthermore if property value exceeds £325k NRBs IHT at 20% on excess value. 

Furthermore if it is a property you still use as your home on visits to the UK, without paying a market rent to trustees you are still treated as the property owner for IHT purposes on eventual death (GROB). So you can do it but highly  inadvisable for a host of reasons.

What you can do is have a UK will drafted on the basis that the property is left to your grand children in equal shares on 'trust for sale' on your death ( ie they would be entitled to sale proceeds rather than house itself).

A Perfectly acceptable piece of estate planning which preserves your £175k residence nil rate band and £325k NRB and ensures your grandchildren inherit in due course. However IHT to pay if estate exceeds available NRBs.

Not sure if the estate would be able to clamp the RNRB if they die still a resident in Spain.

poseidon1

Keep_pedalling said:

poseidon1 said:

Smidge1524 said:

My solicitor has told me it is not allowed for me to put my UK property in trust as it looks like I am avoiding potential care costs.  I would like to make some provision for my 4 grandchildren, now in higher education, who will now find it very difficult to get on the housing ladder.

If your solicitor did actually say you are not allowed to place your UK property in a lifetime trust for grandchildren for the reasons stated, that is untrue.  You can merrily proceed with that idea, but if you end up in UK long term care, the LOA could treat the gift as deprivation of capital disregard the trust and treat you as if you still owned the property. Furthermore if property value exceeds £325k NRBs IHT at 20% on excess value. 

Furthermore if it is a property you still use as your home on visits to the UK, without paying a market rent to trustees you are still treated as the property owner for IHT purposes on eventual death (GROB). So you can do it but highly  inadvisable for a host of reasons.

What you can do is have a UK will drafted on the basis that the property is left to your grand children in equal shares on 'trust for sale' on your death ( ie they would be entitled to sale proceeds rather than house itself).

A Perfectly acceptable piece of estate planning which preserves your £175k residence nil rate band and £325k NRB and ensures your grandchildren inherit in due course. However IHT to pay if estate exceeds available NRBs.

Not sure if the estate would be able to clamp the RNRB if they die still a resident in Spain.

Another good point!

Smidge1524

Under the above scenario is it possible to protect my long term partner (not married) from becoming homeless if I die first? 

Keep_pedalling

Smidge1524 said:

Under the above scenario is it possible to protect my long term partner (not married) from becoming homeless if I die first? 

It would be better if you actually gave us the full picture rather than drip feeding your situation. The next questions, where does your partner live? What is the value of your UK property? What is your marital status?

Smidge1524

I am very nervous giving personal information on the internet! However, I am widowed, so is my partner. We live together in both properties as man & wife and have done for 12 years. He shares all costs; maintenance & living. Uk property £260k. May return to uk permanently within 5 years. Partner has his own income via his pensions. Don’t want him homeless if I die first. Don’t want to leave anything to him as he has no family.