Estate planning - confused about what I am entitled to

poseidon1

No OP who has posted wills on this forum for consideration in the past,  have done so without  full redaction of all identifying names and addresses.

 What we then get to see is more often than not an unremarkable solictor drafted document, indistinguishable from the vast majority produced by the profession for the general public with modest estates. 

Unless the will includes the disposal of  valuable and identifiable works of art, vast stock market portfolios, private company shareholdings, complex trusts etc , I struggle to understand what could be  sufficiently idiosyncratic about the contents of the present will in question which would make the redacted parties  identifiable in anyway. Still, up to the OP how he wishes to progress his queries.

Keep_pedalling

poseidon1 said:

No OP who has posted wills on this forum for consideration in the past,  have done so without  full redaction of all identifying names and addresses.

 What we then get to see is more often than not an unremarkable solictor drafted document, indistinguishable from the vast majority produced by the profession for the general public with modest estates. 

Unless the will includes the disposal of  valuable and identifiable works of art, vast stock market portfolios, private company shareholdings, complex trusts etc , I struggle to understand what could be  sufficiently idiosyncratic about the contents of the present will in question which would make the redacted parties  identifiable in anyway. Still, up to the OP how he wishes to progress his queries.

It is a relatively straightforward will. The OP gets £325k absolutely, and his mother does get the right to occupy the property. There is also the ability for the trustees to sell the house and buy another if she wants to downsize or move into a more suitable home. 

Any surplus in such of a change in property goes to the OP, and she does not get the right to any income if the house is sold and she moves into rented accommodation or residencial care that I know can cause complications with IHT. 

poseidon1

Keep_pedalling said:

poseidon1 said:

No OP who has posted wills on this forum for consideration in the past,  have done so without  full redaction of all identifying names and addresses.

 What we then get to see is more often than not an unremarkable solictor drafted document, indistinguishable from the vast majority produced by the profession for the general public with modest estates. 

Unless the will includes the disposal of  valuable and identifiable works of art, vast stock market portfolios, private company shareholdings, complex trusts etc , I struggle to understand what could be  sufficiently idiosyncratic about the contents of the present will in question which would make the redacted parties  identifiable in anyway. Still, up to the OP how he wishes to progress his queries.

It is a relatively straightforward will. The OP gets £325k absolutely, and his mother does get the right to occupy the property. There is also the ability for the trustees to sell the house and buy another if she wants to downsize or move into a more suitable home. 

Any surplus in such of a change in property goes to the OP, and she does not get the right to any income if the house is sold and she moves into rented accommodation or residencial care that I know can cause complications with IHT. 

If the trust is terminated by one or other of the events you mention, it is likely treated as an (involuntary) potentially exempt transfer by the mother  equal to the market value of the house at the time, requiring her to survive the requisite 7 years before the transfer falls out of  account for IHT purposes. 

Its not ideal that she was deprived a lifetime right to income if unable to live in the house, but I am guessing potential avoidance of care home fees was the primary reason for that omission. 

tonycable

Hi all,

Firstly, thanks to Keep_pedalling for his advice last night - it was most helpful (and hopefully I will be corrected on anything that I get wrong below).  Also thank you to everyone else who posted on here.

In order to try and complete this discussion and make it useful for anyone else who comes across it, i'm going to try and outline my journey to this point, and where I was getting confused in order to help others.

Firstly, the will was written in 2022 by a solicitor.  Both my mum and dad wrote identical wills that were not mutual wills, but covered the same thing for whoever passed first (but I will write about this in the current situation).  They were written at the same time, by the same solicitor, and they both knew the content of each others wills.

Whilst we didn't talk much about the will (because we thought we had a few more years than this), I was aware that the house was owned 50/50 (which I recently found out was as tenants in common in a 50/50 split), and I was told that the share of the house would be passed to me of whoever passed first.
I was aware of the security aspect of it - in that it gave my mum security and I couldn't sell the house, however my mum could sell the house and i couldn't stop her.  I knew the wills were written in a way to protect us both and to ensure that we were both not left with nothing.

Before my Dad passed, he said they we (him and me) would start the process of moving the house into my name, but unfortunately that never happened due to his illness.  Because this comment was made, it made me think that his share would be moved to me (and so that must be the way forward).  I even got all the forms from the HM Land registry site and watched the youtube video about how to complete the forms if a house is left in a will/

Reading through the will, it names me and my mum as executors and trustees. 

There are lines in there about my mum living in the house, and about the profits, but there was nothing in there about a trust that we could see.  My mum said she thinks the house goes into a trust.  Reading through the will again and all the solicitors notes/minutes and my dads notes, again couldn't find anything relating that the house goes into a trust.

Based on this, and conversations that had happened, I then assumed that the house must transfer to me because otherwise why would we have started the process off to transfer it.  This was then getting me confused with with the thresholds and if a house is left directly to me then you get £500,000 instead of £325,000, and assuming that the house was part of the estate so it should some off the £325,000 that I was left in the will.  It threw me that why mention £325,000 in the will if I could get £500,000 - If that was the case then it would be mentioned somewhere so there must be a reason behind it.

This was confusing me as I know if I transfer more than I am entitled to, not only is it illegal, I will also be hit with an unexpected IHT Bill.

Wanting to do the right thing by the will, my mum and my dad, again looked at trusts because thinking if there was something in place, it would be written down somewhere or if there was a particular trust the house should go into there would be a note of it, but no couldn't find anything and looking online at housing trusts just confused me even more.  Just to say at this point, we are very organised and everything referring to the will and other chats with the solicitor are all in one place.  There are recorded minutes of conversations that have taken place.

Thinking that as trustees and I am a trustee, that must mean the share of the house goes to me and we both own it 50/50, but because the will is a legal document and what is outlined in the will that stops me from selling it or kicking her out.  If i'm holding it as a trustee, then that must be fine right?

So then came here for some advise, knowing that I was missing something - There is no way that my mum would know about it going into a trust if it wasn't mentioned at some point when they were writing the wills.  It wasn't until this morning reading all the notes again for my own knowledge, that I have noticed the line in the will that says 'If my spouse survives me. my trustees shall hold my residuary estate on trust for her absolutely'.

Reading the line today, I have absolutely no idea what that actually means but, and with thanks to Keep_pedalling's advise last night, I now believe that means its a 'immediate post-death interest trust' and I must register the trust with HMRC within two years of my father’s death (this looks like it can be done online through the government website).

For my own knowledge, I need to find out a bit more about this, what it means and how to register the trust properly, but that is for my knowledge, and I have plenty of time to sort this out and make sure I do it right.

In regards to the bits about income from the house and care home fees, I wasn't aware of that bit but I would like to think that my parents know/knew that we would all look after each other, and would make sure that we all were protected and at no point were not financially stable.  I can absolutely promise that at no point am i looking to take my mum for a ride and leave her out of pocket or unable to live - whatever that looks like in the future (but we will cross that bridge and do the right thing when it comes to it).  I do know that this situation would have been discussed and they would have known what can and can't be done.

I think the morale is if there is a will, try to find out as much information about it as you can, regardless of if you don't think you need it yet or not.  I'm sure I would have known pretty much all of this if I spoke to my dad about it after the time the will was written and put everything in place ready to go, but I also understand this isn't the sort of thing that people like to talk about or think about sometimes.

But thank you to everyone who offered advise here. I have a much better idea of the situation and how to go forward with it, and can at least start working out who gets what from the estate to stay legal and to make sure it is fair.

poppystar

I do think that sometimes people don’t understand their Wills. Maybe too are afraid to ask because of the cost of more solicitor time or showing ignorance. My parents were generally very on top of paperwork but it was clear after my mother passed that they didn’t really grasp why an IPDI was being set up or how it worked. After my mother’s death my father approached the solicitor for further information on this and how it worked (and paid for this clarification!). I didn’t wish to upset the applecart and fortunately we never got to the stage of downsizing or care home but I do wonder if we had whether what was in the Will about the IPDI (practically nothing) or what was in the solicitor’s later explanation (very detailed) would have been the course that should have been followed. Clearer explanations in writing would save a lot of later hassle and confusion as OP is now finding out. 

poseidon1

Not sure how helpful your recap will be for others since your conclusion relating to the wording regarding the trustees holding residue of estate on 'trust absolutely'  is incorrect.

That wording does not constitute a trust of any kind, it is merely  a very old legal term of art meaning  the estate residue passes to your mother outright with no restrictions.

Admittedly you say did not understand it, but you clearly misconstrued Keep_pedalling's explanation.

Based on Keep_pedalling's brief summary of the will, the IPDI trust attaches to your father's half share of the house, and that is the trust that requires registration with HMRC. I would add that appointing you as trustee of the 50% of the house  trust, may make you a legal owner but does not in any way grant you beneficial ownership ( an important distinction). Right now your mother retains 100% beneficial ownership whilst she remains in occupation.

 Whatever constitutes the residue of the estate ( and at this stage we have no idea what that might be in view of the NRB gift to you) that residue belongs to your mother and certainly not something to concern the trust HMRC inspectorate.

You have indicated that your own reading and research had left you none the wiser, probably time to revert to back to the solicitor to obtain clarity on matters in the will you still don't understand and how this affects what is declared for the purposes of obtaining probate and any IHT reporting.

Going forward, I especially think it important for the solicitor to properly explain to you your duties and obligations related to your role as trustee of the  house trust,  especially on the point that you have no beneficial rights until your mother dies or moves out.

 

Keep_pedalling

Has your mother put a lasting power for finance in place?

Newly_retired

Thanks for all the updates.
i am in a similar position to the OP’s mother. 
My late husband was a tenant-in-common of our house, which we owned together 50:50. 

Because we each have children from our previous marriages, we have left our shares to our own children. For clarification this does NOT mean that his children own their share already as the house is in an IPDTtrust, created by his will, though not named as such. The will creates it but it needs to be registered.  I can live in the house as long as I wish. I can sell it and use all the money to buy another property, or if I don’t wish to buy or I go into a care home, at that point the proceeds from the sale will be divided 50:50.
When my husband died, I had a free half hour with my solicitor who explained the next steps re the house which needed to be taken within two years. I did Probate myself, but my solicitor did the necessary forms for the Land Registry and he referred me to a tax accountant to register the Trust with HMRC. To me this was money well spent. 

NB my will had the same clauses for the property, so I had to make a new one. It does not mention property, which will be need to be sold and my share forms part of my estate, to be distributed according to my will. My step-children get their share at that point too. 

The OPs mother will need to make a new will too.
I hope this is helpful. 

Keep_pedalling

Newly_retired said:

Thanks for all the updates.
i am in a similar position to the OP’s mother. 
My late husband was a tenant-in-common of our house, which we owned together 50:50. 

Because we each have children from our previous marriages, we have left our shares to our own children. For clarification this does NOT mean that his children own their share already as the house is in an IPDTtrust, created by his will, though not named as such. The will creates it but it needs to be registered.  I can live in the house as long as I wish. I can sell it and use all the money to buy another property, or if I don’t wish to buy or I go into a care home, at that point the proceeds from the sale will be divided 50:50.
When my husband died, I had a free half hour with my solicitor who explained the next steps re the house which needed to be taken within two years. I did Probate myself, but my solicitor did the necessary forms for the Land Registry and he referred me to a tax accountant to register the Trust with HMRC. To me this was money well spent. 

NB my will had the same clauses for the property, so I had to make a new one. It does not mention property, which will be need to be sold and my share forms part of my estate, to be distributed according to my will. My step-children get their share at that point too. 

The OPs mother will need to make a new will too.
I hope this is helpful. 

Why would she need to make a new will? The existing one will have clauses to cover her dying last. 

Newly_retired

Maybe. I made one as my executor/ husband had died.