Life Interest Trust & IHT400 (both parents passed away no trust set up)

EB2017

poppystar said:

Would it be possible for you to post an image of your father’s Will (with all names etc redacted)? This might make it a bit clearer. 

If it was an IPDI trust set up in the Will then the total value of the property, not just your mother’s share would have to be included in her estate. Assume from what you’ve said that would be 2x£292k. So as long as your mother had less than £66k in other assets then, as you say, it should be an excepted estate. AFAIK there is no £250000 threshold playing a part in tha calculations at all.

Are you 100% sure you have all the documentation and that there are no separate trust documents?  

I think you may be right that it was an IPDI trust, but the trust was never set up when my father was alive, due to the cost of setting up the trust.  I do think TWBD changed the ownership of the property with land registry to tenants in common, but once my father had passed away we changed the ownership with land registry to my mother's sole name (we did this ourselves) without any problem.  A Trust was just never set up.  Im going to try and post image of my father's will,  There are definitely no separate trust documents.

Land_Registry

I'm unsure if the following is going to assist as you may have moved beyond the points I am making. But it may help to understand the nuances between the legal ownership which we register and the beneficial ownerships involved. I have simply bullet pointed things for brevity and to hopefully 'fit' your scenario re the property ownership aspects
1.  Both parents were joint legal owners. Whether TIC or JTs mattered not when Father died as the legal ownership passed to the surviving joint owner. Probate for the Father was not required to deal with the property 
2. Mirror or other types of will can be entered into and create a 'trust' as described. That can lead to joint owners then applying for a form A/joint ownership restriction BUT they don't have to and the land register is not definitive as to whether they are TIC or JTs as a result
3. By creating the mirror wills/trust it still exists whether the register refers to a form A restriction. And it still applies to how their beneficial ownerships/trust are then dealt with
4. When your Mother died the legal ownership does form part of her estate and probate is then needed. Her executor(s) can then deal with the property, for example sell it, and then dispose of the purchase monies to the beneficiaries as appropriate
5. IF a form A restriction was on the register and there was a single executor appointed then it needs to be complied with when selling. However if there are two or more executors then it does not catch the sale/purchase and will be overreached when the buyer registers their purchase transfer
6. From the thread to date there was doesn't seem to have been a failure on the part of the trustees as the wills/trust/beneficial ownerships are all something that can be dealt with away from the land register of legal ownership. 
7. You can't transfer a 'share' as the legal ownership is always transferred as a whole. Whilst your late Mother could have transferred the whole to herself and the trustees there is no obligation to do so as the wills/trust exists and can still be adhered to with Mother as a sole registered legal owner.
I hope I have followed the thread correctly and the above offer some additional understanding that helps move matters forward 

Keep_pedalling

EB2017 said:

poppystar said:

Would it be possible for you to post an image of your father’s Will (with all names etc redacted)? This might make it a bit clearer. 

If it was an IPDI trust set up in the Will then the total value of the property, not just your mother’s share would have to be included in her estate. Assume from what you’ve said that would be 2x£292k. So as long as your mother had less than £66k in other assets then, as you say, it should be an excepted estate. AFAIK there is no £250000 threshold playing a part in tha calculations at all.

Are you 100% sure you have all the documentation and that there are no separate trust documents?  

I think you may be right that it was an IPDI trust, but the trust was never set up when my father was alive, due to the cost of setting up the trust.  I do think TWBD changed the ownership of the property with land registry to tenants in common, but once my father had passed away we changed the ownership with land registry to my mother's sole name (we did this ourselves) without any problem.  A Trust was just never set up.  Im going to try and post image of my father's will,  There are definitely no separate trust documents.

IPDI trusts are never set up in your lifetime, they are created on death automatically by your will and other than the cost of drafting the will there are no other costs involved.

What is the exact wording of the clauses in the will regarding the home (redact any personal info)? 

EB2017

Land_Registry said:

I'm unsure if the following is going to assist as you may have moved beyond the points I am making. But it may help to understand the nuances between the legal ownership which we register and the beneficial ownerships involved. I have simply bullet pointed things for brevity and to hopefully 'fit' your scenario re the property ownership aspects
1.  Both parents were joint legal owners. Whether TIC or JTs mattered not when Father died as the legal ownership passed to the surviving joint owner. Probate for the Father was not required to deal with the property 
2. Mirror or other types of will can be entered into and create a 'trust' as described. That can lead to joint owners then applying for a form A/joint ownership restriction BUT they don't have to and the land register is not definitive as to whether they are TIC or JTs as a result
3. By creating the mirror wills/trust it still exists whether the register refers to a form A restriction. And it still applies to how their beneficial ownerships/trust are then dealt with
4. When your Mother died the legal ownership does form part of her estate and probate is then needed. Her executor(s) can then deal with the property, for example sell it, and then dispose of the purchase monies to the beneficiaries as appropriate
5. IF a form A restriction was on the register and there was a single executor appointed then it needs to be complied with when selling. However if there are two or more executors then it does not catch the sale/purchase and will be overreached when the buyer registers their purchase transfer
6. From the thread to date there was doesn't seem to have been a failure on the part of the trustees as the wills/trust/beneficial ownerships are all something that can be dealt with away from the land register of legal ownership. 
7. You can't transfer a 'share' as the legal ownership is always transferred as a whole. Whilst your late Mother could have transferred the whole to herself and the trustees there is no obligation to do so as the wills/trust exists and can still be adhered to with Mother as a sole registered legal owner.
I hope I have followed the thread correctly and the above offer some additional understanding that helps move matters forward 

Thank you so much for taking the time to explain Land Registry nuances of ownership.  I now have no concerns about the TIC or JTs as it appears to make no difference as you state.  I am interested to know what a Form A restriction is and how it would look on the title register so I can check.  Many thanks again.

poseidon1

EB2017 said:

poseidon1 said:

OP seems your family are yet another victim of the atrocious will writing firm Thy Will Be Done (TWBD) who we have encountered recently. Preying on the elderly seems to be TWBD's modus operandi - see thread below  

https://forums.moneysavingexpert.com/discussion/6600203/property-probate-trust-nightmare#latest

The information you gave sounded eerily like the case above, hence my wondering if it was a standalone trust similar to that which  occured in the other thread.

Thankfully, from what you say this was not the case.

 However, as with Keep_pedalling I am concerned with you continuing to use TWBD to assist with probate and any technical  IHT compliance that maybe necessary. In my view they  are a dangerously incompetent menace.

I would like to suggest you consult a STEP qualified solicitor ASAP, to explore the possibility that the intended trust in your father's will may have been a nullity from outset.

This could be  on the basis that your father and mother held the property as joint tenants (not tenants in common) and your mother acquired automatic ownership by operation of law. This could be why the Land registry transferred the property to your mother's sole name, and in that scenario the trust automatically fails.

An alternate interpretation of events, is if your parents did hold the property as tenants in common , but by failing to transfer your father's share into the legal names of trustees (whoever they were supposed to be) following his death , this led to your mother to treat the trust as if it did not exsist with the trustees ratifying her actions by failing to fulfil their duties to take legal possession of the trust asset ( ie become registered owners on the land registry subject to a form A Restriction).   

I assume in this regard there were supposed to be property trustees appointed under the terms of your father's will? Would that have been you and another sibling ?  

Either way, cease liaising with with TWBD since they will be keen to cover up any negligence they may be responsible for.  A STEP solicitor should hopefully be able to untangle the mess made by TWBD to enable you to progress with probate sooner rather than later.

If further fees are to be paid, best this goes to a competent adviser. It would be adding insult to injury to allow TWBD any further remuneration from your family.

Thank you for replying. We have chosen not to use TWBD for probate (I think we knew they were not great and everything they had ever suggested to my parents always came with a large cost).   I seem to recall a letter that TWBD had put the property into tenants in common and the next stage was to set up the Trust, but I think my father didn't go ahead as there was an outrageous cost involved.  We personally completed the Land Registry Form to put the property into our mother's sole name and there was no problem in doing this. To make matters worse my parents had taken out a SAMS mortgage and there is a large amount to go back to the lender.  The firm we are using for probate is a separate firm we chose.

I do think the below as you mentioned is the case for my father's Will and my mother, brother and myself were to be trustees.  The Life Tenant was our mother:

'An alternate interpretation of events, is if your parents did hold the property as tenants in common , but by failing to transfer your father's share into the legal names of trustees (whoever they were supposed to be) following his death , this led to your mother to treat the trust as if it did not exsist with the trustees ratifying her actions by failing to fulfil their duties to take legal possession of the trust asset ( ie become registered owners on the land registry subject to a form A Restriction).   

I assume in this regard there were supposed to be property trustees appointed under the terms of your father's will? Would that have been you and another sibling ?'  

To cut to the chase, your primary concern is whether an IHT 400 is necessary in order to obtain the grant of probate and then move on to complete the sale to a purchaser waiting in the wings.

The necessity or otherwise for the IHT 400 turns on whether there was a validly constituted trust following the date of your father's death.

From everything you have said the supposed parties to the trust being your mother ( as life tenant) and you and your brother as putative trustees collectively chose to ignore the trust, and treat the property as your mother's solely owned property shorn of any of the 'protective measures' the trust was originally designed to secure.

For example with the property in your mother's sole name nothing would have prevented her from giving it away to someone else, or for it to be at risk in its entirety to LOA assessment for care home costs. Both potential events contrary to what the trust  ( had it been properly established ) was supposed to prevent.

In any event since you wisely chose not to use TWBD to obtain probate and are using another firm to assist, assuming that firm is a firm of solicitors,  why are you allowing yourselves to  be technically guided by an unqualified unregulated will writing firm ( TWBD) rather than the legally qualified and regulated law firm you have engaged?

 Surely it is the firm you have engaged to handle probate whose input is required here rather than TWBD, what is their view?

Land_Registry

EB2017 said:

Land_Registry said:

I'm unsure if the following is going to assist as you may have moved beyond the points I am making. But it may help to understand the nuances between the legal ownership which we register and the beneficial ownerships involved. I have simply bullet pointed things for brevity and to hopefully 'fit' your scenario re the property ownership aspects
1.  Both parents were joint legal owners. Whether TIC or JTs mattered not when Father died as the legal ownership passed to the surviving joint owner. Probate for the Father was not required to deal with the property 
2. Mirror or other types of will can be entered into and create a 'trust' as described. That can lead to joint owners then applying for a form A/joint ownership restriction BUT they don't have to and the land register is not definitive as to whether they are TIC or JTs as a result
3. By creating the mirror wills/trust it still exists whether the register refers to a form A restriction. And it still applies to how their beneficial ownerships/trust are then dealt with
4. When your Mother died the legal ownership does form part of her estate and probate is then needed. Her executor(s) can then deal with the property, for example sell it, and then dispose of the purchase monies to the beneficiaries as appropriate
5. IF a form A restriction was on the register and there was a single executor appointed then it needs to be complied with when selling. However if there are two or more executors then it does not catch the sale/purchase and will be overreached when the buyer registers their purchase transfer

Thank you so much for taking the time to explain Land Registry nuances of ownership.  I now have no concerns about the TIC or JTs as it appears to make no difference as you state.  I am interested to know what a Form A restriction is and how it would look on the title register so I can check.  Many thanks again.

The form A wording is 

'No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court'

This can be applied for in the scenarios you describe as and when joint owners change from JTs to TIC for example so when mirror wills are drawn up; they sever their joint tenancy; they create a trust in some way. BUT they don't have to apply for a form A restriction to make each of those legally binding.
The purpose of the form A restriction is to put others on notice that such an arrangement exists and that a sole surviving legal owner can't for example take receipt of the purchase (capital) monies on their own when selling. The restriction means they have to do so along with someone else and together they are then responsible for ensuring the wills/trust or agreement are adhered to. 

EB2017

poseidon1 said:

EB2017 said:

poseidon1 said:

OP seems your family are yet another victim of the atrocious will writing firm Thy Will Be Done (TWBD) who we have encountered recently. Preying on the elderly seems to be TWBD's modus operandi - see thread below  

https://forums.moneysavingexpert.com/discussion/6600203/property-probate-trust-nightmare#latest

The information you gave sounded eerily like the case above, hence my wondering if it was a standalone trust similar to that which  occured in the other thread.

Thankfully, from what you say this was not the case.

 However, as with Keep_pedalling I am concerned with you continuing to use TWBD to assist with probate and any technical  IHT compliance that maybe necessary. In my view they  are a dangerously incompetent menace.

I would like to suggest you consult a STEP qualified solicitor ASAP, to explore the possibility that the intended trust in your father's will may have been a nullity from outset.

This could be  on the basis that your father and mother held the property as joint tenants (not tenants in common) and your mother acquired automatic ownership by operation of law. This could be why the Land registry transferred the property to your mother's sole name, and in that scenario the trust automatically fails.

An alternate interpretation of events, is if your parents did hold the property as tenants in common , but by failing to transfer your father's share into the legal names of trustees (whoever they were supposed to be) following his death , this led to your mother to treat the trust as if it did not exsist with the trustees ratifying her actions by failing to fulfil their duties to take legal possession of the trust asset ( ie become registered owners on the land registry subject to a form A Restriction).   

I assume in this regard there were supposed to be property trustees appointed under the terms of your father's will? Would that have been you and another sibling ?  

Either way, cease liaising with with TWBD since they will be keen to cover up any negligence they may be responsible for.  A STEP solicitor should hopefully be able to untangle the mess made by TWBD to enable you to progress with probate sooner rather than later.

If further fees are to be paid, best this goes to a competent adviser. It would be adding insult to injury to allow TWBD any further remuneration from your family.

Thank you for replying. We have chosen not to use TWBD for probate (I think we knew they were not great and everything they had ever suggested to my parents always came with a large cost).   I seem to recall a letter that TWBD had put the property into tenants in common and the next stage was to set up the Trust, but I think my father didn't go ahead as there was an outrageous cost involved.  We personally completed the Land Registry Form to put the property into our mother's sole name and there was no problem in doing this. To make matters worse my parents had taken out a SAMS mortgage and there is a large amount to go back to the lender.  The firm we are using for probate is a separate firm we chose.

I do think the below as you mentioned is the case for my father's Will and my mother, brother and myself were to be trustees.  The Life Tenant was our mother:

'An alternate interpretation of events, is if your parents did hold the property as tenants in common , but by failing to transfer your father's share into the legal names of trustees (whoever they were supposed to be) following his death , this led to your mother to treat the trust as if it did not exsist with the trustees ratifying her actions by failing to fulfil their duties to take legal possession of the trust asset ( ie become registered owners on the land registry subject to a form A Restriction).   

I assume in this regard there were supposed to be property trustees appointed under the terms of your father's will? Would that have been you and another sibling ?'  

To cut to the chase, your primary concern is whether an IHT 400 is necessary in order to obtain the grant of probate and then move on to complete the sale to a purchaser waiting in the wings.

The necessity or otherwise for the IHT 400 turns on whether there was a validly constituted trust following the date of your father's death.

From everything you have said the supposed parties to the trust being your mother ( as life tenant) and you and your brother as putative trustees collectively chose to ignore the trust, and treat the property as your mother's solely owned property shorn of any of the 'protective measures' the trust was originally designed to secure.

For example with the property in your mother's sole name nothing would have prevented her from giving it away to someone else, or for it to be at risk in its entirety to LOA assessment for care home costs. Both potential events contrary to what the trust  ( had it been properly established ) was supposed to prevent.

In any event since you wisely chose not to use TWBD to obtain probate and are using another firm to assist, assuming that firm is a firm of solicitors,  why are you allowing yourselves to  be technically guided by an unqualified unregulated will writing firm ( TWBD) rather than the legally qualified and regulated law firm you have engaged?

 Surely it is the firm you have engaged to handle probate whose input is required here rather than TWBD, what is their view?

Thank you for replying.  The new firm we are using was just to apply for grant of probate.  We did the valuing of the estate ourselves and gave them the figures and they advised no IHT to pay and we were an 'excepted' estate.  The application was checked over by a senior prior to application, who then said we needed to complete the IHT400 due to the Protective Life Interest Trust from my father's Will.  In the firm's words due to "your mother having a life interest in your father's share of the property. As a life interest trust has arisen and it is over the value of £250,000 HMRC require an IHT400 to be completed."  I am presuming therefore, the firm we are using, must think that there is a validly constituted trust following the date of my father's death.  The papers have been with the firm for about 3 weeks now and the IHT400 requirement has thrown us into panic as they didn't mention this before.  
Having to complete an IHT400 delays our application for grant of probate by 4-6 weeks and then probate takes 4-12 weeks and we may lose the buyer for the house.  We just wanted to make sure that an IHT400 is really required or is the firm just wanting to stretch us out to get extra fees from us (they are an online firm so we cant just pop in to see them).
How do we know whether there actually is a validly constituted trust following my father's death? And if not valid how can I express this to the firm we are using.

EB2017

Land_Registry said:

EB2017 said:

Land_Registry said:

I'm unsure if the following is going to assist as you may have moved beyond the points I am making. But it may help to understand the nuances between the legal ownership which we register and the beneficial ownerships involved. I have simply bullet pointed things for brevity and to hopefully 'fit' your scenario re the property ownership aspects
1.  Both parents were joint legal owners. Whether TIC or JTs mattered not when Father died as the legal ownership passed to the surviving joint owner. Probate for the Father was not required to deal with the property 
2. Mirror or other types of will can be entered into and create a 'trust' as described. That can lead to joint owners then applying for a form A/joint ownership restriction BUT they don't have to and the land register is not definitive as to whether they are TIC or JTs as a result
3. By creating the mirror wills/trust it still exists whether the register refers to a form A restriction. And it still applies to how their beneficial ownerships/trust are then dealt with
4. When your Mother died the legal ownership does form part of her estate and probate is then needed. Her executor(s) can then deal with the property, for example sell it, and then dispose of the purchase monies to the beneficiaries as appropriate
5. IF a form A restriction was on the register and there was a single executor appointed then it needs to be complied with when selling. However if there are two or more executors then it does not catch the sale/purchase and will be overreached when the buyer registers their purchase transfer

Thank you so much for taking the time to explain Land Registry nuances of ownership.  I now have no concerns about the TIC or JTs as it appears to make no difference as you state.  I am interested to know what a Form A restriction is and how it would look on the title register so I can check.  Many thanks again.

The form A wording is 

'No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court'

This can be applied for in the scenarios you describe as and when joint owners change from JTs to TIC for example so when mirror wills are drawn up; they sever their joint tenancy; they create a trust in some way. BUT they don't have to apply for a form A restriction to make each of those legally binding.
The purpose of the form A restriction is to put others on notice that such an arrangement exists and that a sole surviving legal owner can't for example take receipt of the purchase (capital) monies on their own when selling. The restriction means they have to do so along with someone else and together they are then responsible for ensuring the wills/trust or agreement are adhered to. 

I have checked and the title register does have a Form A Restriction:  

4  2015-12-21  RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust

corporation) under which capital money arises is to be registered unless authorised by an order of the court.

Land_Registry

EB2017 said:

The form A wording is 

'No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court'

This can be applied for in the scenarios you describe as and when joint owners change from JTs to TIC for example so when mirror wills are drawn up; they sever their joint tenancy; they create a trust in some way. BUT they don't have to apply for a form A restriction to make each of those legally binding.
The purpose of the form A restriction is to put others on notice that such an arrangement exists and that a sole surviving legal owner can't for example take receipt of the purchase (capital) monies on their own when selling. The restriction means they have to do so along with someone else and together they are then responsible for ensuring the wills/trust or agreement are adhered to. 

I have checked and the title register does have a Form A Restriction:  

4  2015-12-21  RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust

corporation) under which capital money arises is to be registered unless authorised by an order of the court.

That's fine but does not really change anything re your specific issue re IHT so do wait for guidance from others or seek specialist advice from a STEP adviser as posted.
The form A does not mean that the trust was created in the way you may need it to have been. It simply confirms that they applied for a form A restriction to be added to the register.
The form A restriction may impact on the sale IF there is a sole executor named in your late Mother's probate. If there is then the 'best' way forward re any sale is for them to appoint someone to act with them as a co-trustee and together they then sell - nothing complicated and just requires a second willing person to be involved. The conveyancers involved with the sale/purchase should know how to deal with it - see PG 21 section 6 for guidance IF there is a sole transferor (executor in a probate sale) - Practice guide 21: using our forms for complex and more unusual transactions - GOV.UK

EB2017

Land_Registry said:

EB2017 said:

The form A wording is 

'No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court'

This can be applied for in the scenarios you describe as and when joint owners change from JTs to TIC for example so when mirror wills are drawn up; they sever their joint tenancy; they create a trust in some way. BUT they don't have to apply for a form A restriction to make each of those legally binding.
The purpose of the form A restriction is to put others on notice that such an arrangement exists and that a sole surviving legal owner can't for example take receipt of the purchase (capital) monies on their own when selling. The restriction means they have to do so along with someone else and together they are then responsible for ensuring the wills/trust or agreement are adhered to. 

I have checked and the title register does have a Form A Restriction:  

4  2015-12-21  RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust

corporation) under which capital money arises is to be registered unless authorised by an order of the court.

That's fine but does not really change anything re your specific issue re IHT so do wait for guidance from others or seek specialist advice from a STEP adviser as posted.
The form A does not mean that the trust was created in the way you may need it to have been. It simply confirms that they applied for a form A restriction to be added to the register.
The form A restriction may impact on the sale IF there is a sole executor named in your late Mother's probate. If there is then the 'best' way forward re any sale is for them to appoint someone to act with them as a co-trustee and together they then sell - nothing complicated and just requires a second willing person to be involved. The conveyancers involved with the sale/purchase should know how to deal with it - see PG 21 section 6 for guidance IF there is a sole transferor (executor in a probate sale) - Practice guide 21: using our forms for complex and more unusual transactions - GOV.UK

Thank you.  My brother and I are joint executors of my mother's estate so there clearly isn't a problem with the Form A Restriction.  Thank you for taking the time to respond and set me straight!