Sell a house in trust before surviving spouse has deceased

WillowLeaf

Editing   

Keep_pedalling

It would be foolish to keep paying the expenses associated with an unoccupied house. There would be no negative implications with CGT or IHT as you mother is currently the beneficial owner (the trust is the legal owner).

Did your father’s will stipulate what was to happen in this situation? E.g. did it stipulate that your mother was to receive any income generated by the estate if she could no longer live there or that the trust was to end at that point?

poseidon1

Keep_pedalling said:

It would be foolish to keep paying the expenses associated with an unoccupied house. There would be no negative implications with CGT or IHT as you mother is currently the beneficial owner (the trust is the legal owner).

Did your father’s will stipulate what was to happen in this situation? E.g. did it stipulate that your mother was to receive any income generated by the estate if she could no longer live there or that the trust was to end at that point?

Yes as indicated by @Keep_pedalling is there a continuing trust of property sale proceeds to provide your mother with ongoing trust income .  A well drafted IPDI trust would have made such provision.

Brie

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

In the meantime I would assume that if mom needs any basic care assistance from a sibling she has applied for attendance allowance and potentially the sibling (or other) has applied for carer's allowance.

GDB2222

Brie said:

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

In the meantime I would assume that if mom needs any basic care assistance from a sibling she has applied for attendance allowance and potentially the sibling (or other) has applied for carer's allowance.

She won't have gifted a lot - if anything!.

She will have relinquished her right to occupy the property (and presumably pay the outgoings, as set out in the trust). It appears that that is because she is now incapable of living there independently. The trust doesn't appear to entitle her to any income in lieu of the right to occupy the property. So, I'm sure the LA will ask questions, but the answers are there.

poseidon1

GDB2222 said:

Brie said:

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

In the meantime I would assume that if mom needs any basic care assistance from a sibling she has applied for attendance allowance and potentially the sibling (or other) has applied for carer's allowance.

She won't have gifted a lot - if anything!.

She will have relinquished her right to occupy the property (and presumably pay the outgoings, as set out in the trust). It appears that that is because she is now incapable of living there independently. The trust doesn't appear to entitle her to any income in lieu of the right to occupy the property. So, I'm sure the LA will ask questions, but the answers are there.

Suspect you missed the reference to mother having gifted £215k in last 4 years.  Difficult to see this as IHT mitigation unless she had a sizeable estate separate and distinct from husband, which seems unlikely since apparently only as around £10k left.

Deprivation of capital could indeed become issue if mother has to fall back on LA care.

GDB2222

poseidon1 said:

GDB2222 said:

Brie said:

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

In the meantime I would assume that if mom needs any basic care assistance from a sibling she has applied for attendance allowance and potentially the sibling (or other) has applied for carer's allowance.

She won't have gifted a lot - if anything!.

She will have relinquished her right to occupy the property (and presumably pay the outgoings, as set out in the trust). It appears that that is because she is now incapable of living there independently. The trust doesn't appear to entitle her to any income in lieu of the right to occupy the property. So, I'm sure the LA will ask questions, but the answers are there.

Suspect you missed the reference to mother having gifted £215k in last 4 years.  Difficult to see this as IHT mitigation unless she had a sizeable estate separate and distinct from husband, which seems unlikely since apparently only as around £10k left.

Deprivation of capital could indeed become issue if mother has to fall back on LA care.

Your suspicion is extremely well founded! .  I was concentrating on the house. 

Keep_pedalling

WillowLeaf said:

Brie said:

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

In the meantime I would assume that if mom needs any basic care assistance from a sibling she has applied for attendance allowance and potentially the sibling (or other) has applied for carer's allowance.

Thanks @Brie

Yes, children will get the proceeds from the house and we will make sure that she is well looked after.

Regarding the deprivation of assets, I'm no expert but have seen some posts here about that topic, and I would be arguing that she had no expectation of needing care when the gifts were made. I appreciate the heads up though.

It’s not that simple, and for someone to give so much of their savings away is a clear case of deliberate deprivation of assets, however hopefully she will never need residential care so this won’t come into play.

At the moment those gifts form part of her estate for IHT purposes as will the house once the estate is wound up because she is currently the beneficial owner. Both are subject to the 7 year rule but as the total value is below £650k no IHT will be due.

Did you obtain probate for your father’s estate? Is the trust registered with HMRC? 

Keep_pedalling

WillowLeaf said:

Agreed, hopefully she won't ever need it and she has a reasonable pension which could help fund if ever it was. I don't want to derail the thread too much in to DoA but I would respectfully (very respectfully given the considerable help you provide) disagree that its a clear case of deliberate deprivation, given the time frames and expectations of needing help, but that'd be a discussion with the council.

Yes we obtained probate for father's estate, and the trust was set up by a solicitor so I would hope they have, but there doesn't seem to be a simple search option to check.

Never assume anything! As he died after the rules changed making IPDI trusts needing to be registered, it should have been but worth checking to make sure this iris the case

Where you say that she is under £650k, which she is, would there not be one or two lots of Residential NRB to add to the £650k? Just curious as to how it works.

If needed they would be available if needed but claiming them adds the additional complication of needing to do a full IHT return. 

Marcon

Brie said:

Assuming the house is sold then the children will presumably get the proceeds under the terms of the will. 

May I suggest that they set this money aside in case mom needs more care than is available from the sibling looking after her?  

My concern is that if she needs care, at home or in a care home, she now has little money to pay for it.  If she goes to the local council for assistance they will ask what she has been doing with her assets over the last several years.  When they discover she gifted a large portion to her children they will consider this deprivation of assets and look to the children to pay for the care on the basis of what they were gifted.  If everyone has spent all the money the council may start suggesting that they sell their homes or other assets to pay.  

The council won't do any such thing. If they consider she has deliberately deprived herself of assets, they will simply decline to contribute to any care costs and it'll be up to the mother and her family how things proceed from there.