Simplifying affairs prior to death

NedS

Hi,

My elderly parents and I (as their PoA) are seeking to simplify their affairs as much as possible in preparation for the inevitable with the goal to make things easier for the surviving spouse/executors and is a process we will also likely want to undertake with my wife's parents (and indeed for ourselves once the time comes)

I would appreciate any advice or thoughts on the following. The affairs are relatively straight forward, I believe.

Both parents are alive with mirror wills in place.

The family home is held tenants in common, with each to leave their half share to myself in trust in their wills with the surviving spouse retaining the right to reside at the property during their lifetime (all standard stuff). I understand the trust must be registered within 2 years of death and that no probate is required on first death to update the land registry? No further action required at this time.

Assets are under IHT thresholds (less than £650k including the family home) so no IHT concerns and the additional RNRB should not be required. No further action required at this time

We are hoping that probate will not be required.

There are the following cash assets, all of which are below the respective institutions amounts requiring probate:

Joint bank/BS accounts: I understand these pass immediately to the surviving spouse and do not form part of the first deceased estate. We will ensure there are sufficient assets in these accounts such that the surviving spouse has enough to cover short term needs whilst the estate is administered. No further action required

Sole savings accounts: Containing small amounts of savings. I understand these will be frozen on death and that probate will not be required to release these funds to the executors as they are well below the institutions published limits requiring probate. Consider moving into joint names to simplify upon death.

Stocks and Shares ISA: There is a small S&S ISA (sole name). Not sure if this requires probate due to it being S&S, but is under the institution's threshold requiring probate. May move into a Cash ISA to simplify??

There were some privately held shares but these have now been sold as they may have required probate.

Any income received post death should fall well within the £500 tax free amount so there should be nothing to report to HMRC post death. Most income would be tax free within an ISA anyway which I understand can retain it's tax free status for up to 3 years.

There are no known debts at this time.

Based on the above, am I correct in thinking that the executors will not be required to make IHT returns, will not require probate and will not need to report any income or pay any tax to HMRC for the estate. So the executors role will largely be limited to collecting the residues of the estate, identifying and paying any outstanding debts and distributing residues of the estate, all of which residues go to the surviving spouse?

Is there anything else we should be aware of or steps we can take now to further simplify affairs?

sheslookinhot

Looks good, just a few points

Why is the property left in trust ? What is the benefit in your circumstances ? Seems like an unnecessary expense.

Joint accounts- I would be sure that 50% of these do form part of the first deceased's estate.

Brie

Do you have copies of the wills? And a list of all the various accounts/banks used/utility companies etc?

Have you registered with the banks that you have POA? Or have your folks considered adding you as third party authority so you can actually do the banking for them when the need occurs?

In a similar vein they might want to write out a letter of authority so you can deal with utility companies and other various bills. (very easy, typed letter stating "I, Ned's mom, at address XYZ, give Ned full authority to act on my behalf with anything to do with my account." Dated and signed, enough copies made to send to whomever except the banks )

Have you discussed what they want to do about funerals? Is there a list of people that you've never met that might need to be invited? (FiL had friends he hadn't seen in 50 years attend his memorial) (note: this is a slightly different list than the 20 people that they still send Christmas cards to - make sure you don't get them mixed up)

And declutter the house as much as is comfortable for them. That stuff in the loft that hasn't seen daylight since 1962? Out. Tea towels that are at the bottom of the drawer and tissue thin? Out. It can be a great task for you and them to do together - lots of memories, so you might want to record some of it - we didn't do enough of that before it was too late. It's also a great time for them to pass things along to see how happy having Aunt Mary's cream jug makes someone else. Remember that when they both are finally gone you're going to have to do it then so you might as well get an early start. (google Swedish Death Cleansing to get more info on this)

Great that you're getting a head start on this.

NedS

Thanks for the responses

The property is left in trust to ensure each is able to leave their half to their children, not to each other. Common where self-funded care may be required.

Yes, I have copies of the wills (originals held by family solicitor), and details of all accounts, credit cards and pensions etc. Mum and Dad had been reasonably well organised with good records at the point I started assisting them with their affairs some time ago.

PoA is already registered with most financial institutions and utilities and DWP etc as required. Certified copies are available for further use. Note I would highly recommend to anyone reading who is likely to go through this to start the process of registering PoA with banks etc 6-12 months before you think you may actually need it, as it took 6 months to get everything sorted with some banks due to having to take time off work, and bank branches closing etc (and losing documents in the process!), so give yourself plenty of time. It was stressful enough, but would have been far more stressful trying to get PoA registered and set up if urgent financial matters were pending.

Funeral wishes are known, and burial plots already purchased but I do not have a fully up to date list of contacts. I do have contacts for many current acquaintances who I hope would spread the word, but as capacity diminishes, they lose contact as they no longer engage in daily activities/hobbies etc. I had considered a notice in the local paper. Further advice welcome.

The house isn't too bad/cluttered, and I'm prepared to deal with that once the time comes, but again may find dealing with it stressful if it coincides with having to sell the house to fund care home fees.

sheslookinhot

< < <The property is left in trust to ensure each is able to leave their half to their children, not to each other. Common where self-funded care may be required.> > >

Could this not be deemed deprivation of assets ?

NedS

https://forums.moneysavingexpert.com/discussion/comment/81919075#Comment_81919075

No, it's a post death trust - the property is to be left in trust in the will, not during their lifetime. Perhaps I did not explain that very well. I've edited the original post to reflect the share is to be left in trust in the will.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81919075#Comment_81919075

No, although it is something I would only consider if I was in a blended family or somewhat younger than we are where the surviving spouse may remarry, rather than to avoid care costs.

We have simplified our estate by having just one joint bank account, one sole account each, emergency cash split between a joint savings account account and PBs, and main savings in a single S&Ss ISA each.

NedS

Having read a little more on here regarding the property ownership, I'm trying to better understand the position with the house, post death trust and if probate would be required for either estate. I'm hoping @Land_Registry may be able to clarify.

House is jointly owned tenants in common by parents, 50% share each.

Upon first death, 50% share passes in trust to me with surviving member retaining rights to live at the property as per the Will

Upon second death, the remaining 50% passes to me.

Upon first death, legal ownership passes to the surviving member as was jointly owned. If I do nothing (do not update deeds), then upon second death, probate would be required to update the deeds?

If the surviving member were to update the deeds following first death, and add the trust (with me as the beneficiary/trustee) as the new joint owner, would probate then be required to update the deeds upon second death, or would legal ownership pass to the trust which I can then update to me as trustee. Obviously I would not want to create a potential CGT liability upon first death by incorrectly registering myself as a joint owner at this stage.

I see some advice suggesting to leave the land registry until after the second death to sort out all at once rather than doing it twice (after each death), but I think this adds the complication of now requiring probate for the second estate? So I guess the question is which is easier - dealing with Land Registry twice or obtaining probate?

Keep_pedalling

On the first death legal ownership of their share goes into trust, beneficial ownership passes to the surviving spouse. Probate is not required on the first death regardless of whether you change the LR or not.

The trust will need to be registered with HMRC within 2 years of the first death.

Land_Registry

https://forums.moneysavingexpert.com/discussion/comment/81920109#Comment_81920109

Probate is required when there is a sole legal owner who has died. All the time there are two registered legal owners, and one dies, probate is not required.

I'm doubtful that the Q is one of HMLR twice or Probate once as the two are quite separate Qs.

Death is factual (death certificate) and can be proven when needed. The legal ownership is therefore often 'simple' to deal with as a result.

The key with your scenario, and for many others who post about wills, trusts and tenancies in common are the beneficial ownerships and how they work. They can be far more complicated and who does what and when re realising those beneficial interests and how they might be protected on the land register or might be better protected is really the Q you need to answer first.

Don't mix up the need for probate or updating the land register with all understanding who benefits from what and when and which circumstances. And what's best for all going forward

If you are focussing on CGT and when and how that is paid then GOV.UK offers guidance

Capital Gains Tax: what you pay it on, rates and allowances: Work out if you need to pay - GOV.UK