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

poseidon1

EB2017 said:

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.

Seems to me given your probate practitioners have had direct access to the relevant documentation and have seen some evidence of the trust's 'exsistence' via the will and form A Restriction you have since discovered, you are stuck with submission of the IHT 400 and the additional costs arising therefrom.

An unhappy outcome resulting from your parents original ( expensive) dealings with TWBD.