Trust bank account best options

MissSuS

Thank you bobster2 for your practical advice. It’s almost a two-step understanding; the legal side and the practical side.

Incidentally the trust document would be your mother's Will ( nothing else). Surely you retained a copy for your own records at the time of your mother's death? Not sure what you would have 'signed' and returned to the solicitor in this context.

I have photos of the Will. The Trust Document was created by the solicitor and just stated the details of the parties, the property and trust name from what I recall.

Here are the relevant sections from the Will:-

The Trustee will allow the Beneficiary to live in the property subject to maintaining the property in a good state of repair.

The Trustee can end the right to reside in the Property if the Beneficiary

• does not maintain the Property in a good state of repair.
• permanently vacates the Property.
• becomes unable to reside independently.

The Trustee can consider any reasonable request made by the Beneficiary towards the acquisition of another Property for use by the Beneficiary.

Subject to the above the Trustee will hold the capital and interest for (me)’

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82103285#Comment_82103285

Unusually, if you have quoted the pertinent clause of your mother' will verbatim, then as I indicated in my first post you can determine the trust has been terminated ( completely) by virtue of the fact the Beneficiary has permanently vacated the property by reason of being unable to reside independently.

Your mother did not apparently see fit to give your stepfather an ongoing right to enjoy a liftime income from the resulting property sale proceeds, so those capital monies are free from any ongoing trust and are yours to invest/ save in your own name in whatever way you deem fit.

You should certainly confirm my interpretation with a solicitor, who will have had sight of the entirety of the Will rather than just the excerpt you have shared, but if I am correct all that is now required is to notify and update HMRC's trust register of the cessation of the trust and closure of their records.

A convenient cessation date for the trust could be the property sale completion date.

One last point which may adversely affect the beneficiaries of your stepfather's estate, relates to the termination of an IPDI trusts in these circumstances.

The termination, is treated as if the Step father had made a personal gift (Potentially Exempt Transfer - PET) of the property proceeds to you for IHT purposes.

He will therefore have to survive 7 years from date of this PET for it to fall away from his estate and reinstate his remaining nil rate band. His beneficiaries maybe dismayed to hear this potential outcome especially if his assets are near IHT thresholds, so the solicitor should also convey this information to them for completeness. The article below, provides a fuller explanation -

https://wards.uk.com/services-for-you/trust-creation-management/trusts-guides/life-interests-rights-occupation/

Your case is an illustration of one of the potentially complicated tax outcomes inherent when establishing IPDI trusts in a 'blended' family situation.

MissSuS

Unusually, if you have quoted the pertinent clause of your mother' will verbatim, then as I indicated in my first post you can determine the trust has been terminated ( completely) by virtue of the fact the Beneficiary has permanently vacated the property by reason of being unable to reside independently.

This is the pertinent clause verbatim. It’s unlikely but theoretically possible that he might be able to live independently in the future. Should the funds remain available in the trust for that purpose (as part of the ‘acquisition of another property’ statement, or any other statement)?

You should certainly confirm my interpretation with a solicitor, who will have had sight of the entirety of the Will rather than just the excerpt you have shared, but if I am correct all that is now required is to notify and update HMRC's trust register of the cessation of the trust and closure of their records.

Thank you, yes I will confirm your interpretation.

He will therefore have to survive 7 years from date of this PET for it to fall away from his estate and reinstate his remaining nil rate band. His beneficiaries maybe dismayed to hear this potential outcome especially if his assets are near IHT thresholds, so the solicitor should also convey this information to them for completeness. 

OK I didn’t know this. I don’t know who he is leaving his estate to nor it’s size but I would guess it is below £325k even with this £250k added but it’s certainly helpful to be aware, especially if it’s found he has a Faberge egg tucked under his mattress. 😊

I have to say thank you poseidon1 (and others) for your detailed help.  There is no personal benefit or public recognition for the help that people here provide for free but it does warm the heart to know people want to help others for no other reason than to do a good deed.

poseidon1

You are to be forgiven for not knowing the IHT consequences of an IPDI trust being terminated whilst the life tenant is alive.

I am certain the vast majority of unadvised trustees dealing with these popular trusts are equally unaware, and if questions to this forum are an indicator the typical smaller high street solicitor who create these arrangements are very bad at providing decent guidance to their clients.

Best of luck moving forward.