Will Trust , what sort of trust is it and is IHT due ?

Pumpkinqueen21

Hi Keep Pedalling, I don't know how we can prove this as it was a verbal agreement even though we kept receipts, but as the house is the only asset , the solicitor says there is no way to get it back as all the money and the only asset is tied up in the house. Even though it can be seen from the draft of the newer will that was never signed, the solicitor says the only way we can physically get our hands on physical money is by dissolving the trust, and then everything automatically goes to the beneficiary and we risk losing our lifetime tenancy too. Whilst the trust  and the way it was written provides us with a rent free living situation, that would be jeopardised if the trust were challenged. It really ties us up in so many ways, which is why the family begged her not to do it. But for some reason in the end , she reneged on the new will idea and we are where we are. 

poppystar

If all the family were in agreement on the newer Will is there a reason why a Deed of Variation has not been considered? I assume that may be because to change to, say a 50% split of the estate, where it is all tied up in the house, would effectively make you homeless albeit with some money. At present you have a roof over your head but are very tied to the house for the future. In the same way your sister/nephew currently have no access to the estate and are unable to take any benefit from their inheritance. 

Keep_pedalling

I don’t think you are getting the best advice from this solicitor. 

Regardless of lack of documentation you provided your mother with a loan and you have a number of options. 

1. Sell the house, take your money and distribute the rest appropriately.

2. Get you sister and nephew to make a deed of variation as per poppystar’s post

3. Have the house transferred to the trust but with a charge against the property protecting your investment.

If your nephew is an adult 2 is the best option as the deed of variation effectively changes the will and the trust will never have existed. Are they actually aware of the mess your mother has left and willing to go with the terms of her unsigned will?

poppystar

Keep_pedalling said:

I don’t think you are getting the best advice from this solicitor. 

Regardless of lack of documentation you provided your mother with a loan and you have a number of options. 

1. Sell the house, take your money and distribute the rest appropriately.

2. Get you sister and nephew to make a deed of variation as per poppystar’s post

3. Have the house transferred to the trust but with a charge against the property protecting your investment.

If your nephew is an adult 2 is the best option as the deed of variation effectively changes the will and the trust will never have existed. Are they actually aware of the mess your mother has left and willing to go with the terms of her unsigned will?

I’m wondering if the fact that they were living in the house, possibly rent free, might make it difficult to prove it was a loan. Maybe it could be seen as in lieu of rent? I don’t think from the opening post that OPs mother was to take out the equity release - I read it as OP intending to do that after his mother had died and once the house was his - so not a loan from her point of view potentially. Although if he had then used the released money to give an inheritance to the sister the situation would be much the same as now unless the equity released property was then sold. 

Pumpkinqueen21

Hi Keep-pedalling. Thanks for all your help and suggestions. We have had further meeting with solicitor and we can sell up and downsize it appears from a loophole the solicitor says can be exploited and she reckons that by selling up and breaking our lifetime interest tenancy, that may be enough grounds to break or dissolve the trust. She is researching further. We would have a delay anyway as my father who bought the house in 1958 never registered it with land registry back in the day so I believe there is currently about an 18 month delay at land registry too. Thanks for the IHT info. We will go straight onto probate to forms. Is their a box to tick about NRB etc as mum was a widow and would have dads allowance too ?

bob_a_builder

" Is their a box to tick about NRB etc as mum was a widow and would have dads allowance too ?"
YES
Question 7.4  ( a tick box) on the PA1P  form 

Willeri

Looks like you know the position now, but this is a life interest trust aka interest in possession trust aka an immediate post death interest trust. No IHT is there is a full transferable mil rate band from when your father died as the property value is within 2 NRB. You are life tenants with rights to live in property until your own deaths so get the benefit of improvements made but on your death reverts to your sister or if she is not alive your nephew,  when you die the value of the property is treated as part of your estate for any IHT on your estate due to the interest in possession. 

Willeri

PS. Although the trust terms may allow a sale to down size, any surplus funds belong to the thrust to preserve original property value for the beneficiary (your sister or her son). Sale won’t break the trust but you can elect to do so but again all sale proceeds belong to the trust. If your solicitor has to do research sounds like they don’t know this

doodling

Hi,

Just to be really clear, there are the following possibilities, depending on the facts:

1. The money from your pensions was a loan to your mother and that loan must now be repaid.  The consequence is that the house must be sold to pay you back and the sister / grandson get the rest.

2. The money from your pensions bought you an interest in the property.    Consequences as above.

3. What you say about the family agreeing with the new (unsigned) will is.correct, in which case a deed of variation can be signed to put you in the position you thought you were going to be in (assuming the grandson is over 18).

Do any of those possibilities represent reality?

Note that options 1 and 2 get you your pension money back no matter what the will says but do leave you without a house.  Option 3 is the obvious solution if all family members are able to agree.

Pumpkinqueen21

Hi All, I'm confused. There is no box 7.4 to tick on the probate online application. Not sure how I can account for residential nil rate band on that online form. when I use the online IHT calculator for and estate for say £450 K, it tells me no inheritance is due. So does this mean I still have to fill in IHT forms first ?  Thank you