House left in will, and selling our shares.

xtruss

Hello,

Hopefully someone may be able to help with my question.

A few years ago our parents put their house in trust to us. I have 2 brothers, 1 off them lives in Australia and 1 in the UK, so at the time the house was left in trust it was just myself and UK brother put on the deeds of the property (so 2 names on the deed)

My parents have both now passed on and the house then automatically came over to us (no probate required) . In my Dad’s will the house is left to all 3 off his son’s

The brother in Australia wants to move back to the UK and back to the family home, and buy out myself and my other brother for 2/3rd’s of the house value – We are all happy about that.

However it looks as though this will have to be treated as us selling the house, so paying a solicitor for that – and then him buying the house for his share – and again using a separate solicitor for that.
There is no mortgage on the property, and also my Ozzy brother is aware he will have to pay stamp duty on his portion of the share he is paying for.

Is the above the way to go on this, or is there a simpler way?

Thanks in advance.

RAS

Where did you parents live between the date they put the property into trust? 

Was this more or less than 10 years ago?

@poseidon1 for advice.

xtruss

Parents carried on living in the house. Trust was done in 2017. Mum a couple of years ago, and then my dad recently..

xtruss

I got the days wrong trust was may 2015 dad passed June 2025 so just over 10 yrs

Keep_pedalling

xtruss said:

Parents carried on living in the house. Trust was done in 2017. Mum a couple of years ago, and then my dad recently..

xtruss said:

I got the days wrong trust was may 2015 dad passed June 2025 so just over 10 yrs

In which case this was a gift with reservation of benefit so for IHT purposes the house still formed part of your parents estates. The date of transfer also means the residential NRB, so depending on the value of the house IHT may be payable. 

9 years  of house price inflation probably means there is a CGT liability to be paid as well. These sort of arrangements were usually sold by sharks scaring people about care costs so that could charge a fat fee for creating a trust that only complicates things for your beneficiaries. 

You should take professional advice with regard to winding up the trust otherwise you could find yourselves in hot water with HMRC.

poseidon1

From the information you have shared with the forum contributors I have potential  tax concerns that should be addressed before considering this inter sibling property transaction.

Please confirm the follow:

1) Did the precise terms of the trust set up by your parent's during their lifetime permit them to occupy the house for life, and then on 2nd death you and siblings become  absolute owners? If possible can you provide a redacted copy of the relevant  parts of the trust document to ensure the trust does not continue beyond death of surviving spouse. Also confirm the exact execution date of the trust deed.

2) Was the trust set up by a solicitors firm or an unregulated will writing company? Either way what was the rationale that convinced your parents to take this action and was Inheritance tax mitigation ever mentioned. Was it set up in the joint parents names as a joint trust gift or in  the name of just one of the parents?

3) What was the approximate value of the property when placed in trust in 2015 and its current market value now?

4) Has the trust ever been registered with the HMRC Trust Registration service, or has there ever been any dealings or correspondence with HMRC during the trust's exsistence?

To provide context to the above questions please note the following:

A) Trusts of the nature you described are reportable to HMRC's IHT division if the gifted trust asset exceeds 80% of the prevailing nil rate band  ( or bands for joint settlors) at inception. In this case was the property worth above £260,000 or £520,000  if a joint settlement?

B  ) Depending on values in A) above the trust may have triggered a 20% IHT liabilty if property value at inception exceeded £325k or £650k at inception.

C ) Depending on date trust was set up in 2015 trust may have triggered a 6% IHT 10 year anniversary charge in 2025 depending on whether nil rate bands exceeded. 

D) if trust did terminate on father's death,  and this was after the anniversary date in C) above there may also be a separate trust IHT exit charge at a rate linked to the prior 10 year charge.

E) As mentioned by Keep_pedalling, and not withstanding the above , the house remained an asset of your father's  estate  for the purposes of estate IHT, so what was the net value of his other assets
On death? IHT that may have been incurred by the trust internally does not obviate the possibility of separate estate IHT exposure, ie double IHT charges.


You will appreciate from the above that depending on property values, this ill considered trust may have created significant tax problems, so hopefully it was only a  very modestly valued property at all times, rendering much of the above points of academic interest only.

Finally, what if anything, have you reported for probate purposes so far?  Hopefully you have not taken the view the property value could be excluded from consideration.

xtruss

Thank for you taking the time to answer - However your answer is not relevant to my question. 
The trust was setup by a long estaiblished and trusted solicitors practice, who we have been consulting during the process of probate etc.  Since they are the professionals and are privi to all the facts, i trust what i have been told.

silvercar

A few years ago our parents put their house in trust to us. I have 2 brothers, 1 off them lives in Australia and 1 in the UK, so at the time the house was left in trust it was just myself and UK brother put on the deeds of the property (so 2 names on the deed)


My parents have both now passed on and the house then automatically came over to us (no probate required) . In my Dad’s will the house is left to all 3 off us

This seems contradictory, either the house was in the trust and so isn’t in your late father’s estate or it was part of your father’s estate and left according to his will.

 If it formed part of the trust, then it seems that only you and your UK brother are part owners and can sell it to your Ozzy brother for whatever amount you like, though as related parties any stamp duty would be calculated on the basis of its market value eg if it is worth £600k, your Ozzy brother could pay you and your brother £200k each and pay SDLT on the £600k value.

 If you look at your father’s will - this ignores the trust situation, which I’m not sure you can do- then you each own a third and your brother can pay your a third value each and only have SDLT on the value of the two thirds of the property he is buying as he already owns the remaining third.

 Don’t ignore the possibility of a Deed of Variation, this would allow you to change the will, with the consent of the beneficiaries, so you could for example leave more of the house to your Ozzy brother and take more of savings for you and your UK brother. This would reduce the SDLT your Ozzy brother needs to pay.

Keep_pedalling

xtruss said:

Thank for you taking the time to answer - However your answer is not relevant to my question. 
The trust was setup by a long estaiblished and trusted solicitors practice, who we have been consulting during the process of probate etc.  Since they are the professionals and are privi to all the facts, i trust what i have been told.

99 out of 100 of this type of trust were mis-sold so I would not trust them at all and would be taking independent advice., but as you seem determined to stick with them I think your original question has to go to them we don’t have enough info to help.

swingaloo

xtruss said:

Thank for you taking the time to answer - However your answer is not relevant to my question. 
The trust was setup by a long estaiblished and trusted solicitors practice, who we have been consulting during the process of probate etc.  Since they are the professionals and are privi to all the facts, i trust what i have been told.

It the solicitor knows what they are doing then why have they not answered your question? Or are they just dealing with the conveyancing?

xtruss

Thank you to all that have replied - Its a complex subject, and as said probably not one you can easily comment on without seeing all the documentation.

The solictor has offered to do the conveyancing for both parties as they are aware of the facts..  I was just looking at other options or thoughts.