Should we have registered the trust?

TechDad

Afternoon all,

My mum died almost three years ago in Feb '23, and in her Will she left her half of the house (that she owned as Tenants in Common with my Dad) in trust with me and my sister as the beneficiaries, and also alongside dad as the trustees.  It was my understanding back then that we didn't need to do anything regarding the house as we hadn't actually inherited it.  Dad would just continue living in the property as he has a "life interest" until such time as he dies, and only then do we actually inherit the property and have to start worrying about land registry, ownership and inheritance tax etc.

However, Dad may need to go into a care home soon, and as part of the investigations I'm doing into that, I've come across something that says trusts should be registered with HMRC.  Have we messed up here, should we have registered the trust with HMRC?  I can't find a definitive answer on the Gov website.  I did find the following which initially made me think we didn't need to, but now I'm not so sure based on the wording around 2 years:

You must register your trust even if it’s not liable for UK taxes - unless any of the following apply.  You do not need to register your trust if it:

• is a will trust created by a person’s will and comes into effect when they die (as long as they only hold the estate assets for up to 2 years after the person’s death)

To me this implies that we didn't need to at the time, but we should have after two years.  Is that correct?  I'm a bit confused and I want to make sure we're doing everything we need to, even if retrospectively.

Your time is very much appreciated, thank you.

Newly_retired

Yes, you are meant to register the trust within two years of the death. 

HobgoblinBT

You should have registered the Trust as noted above.  I am Trustee of a trust similar to that you described which was not registered on time.  I just registered it late and have not been fined for late registration.  The Inland Revenue are more interested in late registration of trusts that generate a taxable income.

Now that you are aware of your obligation I recommend that you register the Trust today.  The online process is straightforward. Just get your and any other trustees, beneficiaries and the settlor’s national insurance numbers, addresses and dates of birth and it should be easy to do.

poseidon1

TechDad said:

Afternoon all,

My mum died almost three years ago in Feb '23, and in her Will she left her half of the house (that she owned as Tenants in Common with my Dad) in trust with me and my sister as the beneficiaries, and also alongside dad as the trustees.  It was my understanding back then that we didn't need to do anything regarding the house as we hadn't actually inherited it.  Dad would just continue living in the property as he has a "life interest" until such time as he dies, and only then do we actually inherit the property and have to start worrying about land registry, ownership and inheritance tax etc.

However, Dad may need to go into a care home soon, and as part of the investigations I'm doing into that, I've come across something that says trusts should be registered with HMRC.  Have we messed up here, should we have registered the trust with HMRC?  I can't find a definitive answer on the Gov website.  I did find the following which initially made me think we didn't need to, but now I'm not so sure based on the wording around 2 years:

You must register your trust even if it’s not liable for UK taxes - unless any of the following apply.  You do not need to register your trust if it:

• is a will trust created by a person’s will and comes into effect when they die (as long as they only hold the estate assets for up to 2 years after the person’s death)

To me this implies that we didn't need to at the time, but we should have after two years.  Is that correct?  I'm a bit confused and I want to make sure we're doing everything we need to, even if retrospectively.

Your time is very much appreciated, thank you.

As indicated by others you are required to register the trust per link below-

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

However this process is mostly AML ( anti money laundering) , but you may have  more onerous duties  in having to  sign up for trust self assessment tax returns, if the will trust requires that you generate an income for your father from the trust fund, if he is unable to reside in the property which  from what you say now appears to be the case.

What does the will trust say about the circumstances that have now arisen?

TechDad

That's great, thank you for the information.  I've been on and registered all the details, the form was simple enough and I had all the required details.

Thank you all for your time, that's really helpful.