Landlord wanting to set up trust

Khaderbhai

Apologies if in wrong category, please move if so! 

A friend is a private landlord who is not overly financially savvy. They are trying to transfer the rental properties they own outright across to younger family members before they get too old. They seem to think a trust is the best way but on a quick google, trusts can be pretty complicated. Main goal here for them is to ensure the family members inherit them and no one else. Would a will do this or does it need to be a trust? Would assume the family members would get IHT bill.

Has anyone done this before and whats the pros and cons? 

Thanks

dinosaur66

i looked at doing something like this as i am a landlord and also only sibling in my family who has no children and has never married

when i looked into it 

it is a legal and tax mindfield with all sorts of taxes and charges to pay upfront or in inheritance tax 

i did not go to one as just reading up on it was enough but it would need a specialist proffesional to sort this out for him to pay as little as possible.

in my case i would have been paying tens of thousands out of my own pocket to just to give away my own propertys and not even sell them

user1977

Why do they think a Will won’t do the job? 

Khaderbhai

user1977 said:

Why do they think a Will won’t do the job? 

Would a will do it then? 

mta999

Leaving inside inheritance tax etc the best way to transfer them to 'family members' is either 1. do exactly that ie give the properties to them now so they own them now or 2. write a will so on death they are transferred

The advantage of 1. is that if they survive seven years the transfer falls out of inheritance tax

itsthelittlethings

mta999 said:

Leaving inside inheritance tax etc the best way to transfer them to 'family members' is either 1. do exactly that ie give the properties to them now so they own them now or 2. write a will so on death they are transferred

The advantage of 1. is that if they survive seven years the transfer falls out of inheritance tax

Not sure 1 is the best way, it’s a big ask, they will lose all their first time buyer privileges etc.

elsien

They may also not want a responsibility of being a landlord when the time comes.

sammyjammy

If they own it they can evict the tenants and dispose of it, not sure the lack of first time buyer status would be a big deal in the circumstances.

user1977

Khaderbhai said:

user1977 said:

Why do they think a Will won’t do the job? 

Would a will do it then? 

If the "it" is just passing ownership on death then yes, that's how people normally do it.

itsthelittlethings

sammyjammy said:

If they own it they can evict the tenants and dispose of it, not sure the lack of first time buyer status would be a big deal in the circumstances.

As someone said, they might not want the responsibility of all that. It depends how much the property is worth vs first time buyer privileges. I don’t know how LISAs, help to buy, stamp duty etc are affected.

SiliconChip

My friends have done it by purchasing their rental properties using a limited company and making their children the directors and shareholders in the company. I don't know the details and I've always felt that there must be some pitfalls that could trip up either or both the parents and the children at some point in the future, but they seem quite confident it'll work.