Issues with family trust - investment

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82139022#Comment_82139022

I’ve taken on the Trustee role in place of my mum based on my power of attorney status.

I may be quite out of date on powers of attorney but in the old days a normal power of attorney did not cover trusts and trustees. You needed a special Trustee Act power for that. It may be that the power you have allows you to step into your mother's shoes as a trustee but you should check that.

You may also want to look at the trust deed to see what it says about trustees who aren't "able to act". It may be phrased as losing capacity.

If you are going to act as a trustee you should really have been appointed as a trustee with a formal deed of appointment.

You say the professional trustee has been replaced - by another professional trustee presumably? Why are you not talking to them instead of other solicitors? Are you asking the other solicitors to replace the new professional trustees?

What is high risk about this trust that other solicitors have "pulled out"?

poseidon1

Ok if the trust is fully discretionary, it has a tax structure which likely frightens away the average low level solicitor who find discretionary trust taxation challenging.

You did not answer my question whether your mother lived in the property now being sold. If so the tax complications of the trust would not have been apparent in its early history because no income was flowing.

Once you commence investing for income you face the discretionary trust income tax rate of 45% , has any one explained that?

You as trustee would be required to complete annual tax returns, account to HMRC for the 45% tax before paying the net trust income to your mother. Assuming your mother is not liable to higher rate tax on her other sources of income, she can recover the excess 25% by submitting a tax refund claim.

Fortunately if this was a joint settlor trust, or created as two separate discretionary trusts the value of the asset is well below the level of 10 year anniversary IHT charges which could have been another headache for you to deal with.

I have to say your parents were very ill advised to have ever set up this trust/s since it does not appear to be motivated by IHT avoidance and even if that were a possible motive it simply would not have worked.

Were they sold these trusts as care home fees avoidance structures? If so how long ago were they created?

MistySky

https://forums.moneysavingexpert.com/discussion/comment/82139179#Comment_82139179

Mum stepped down as a trustee and I was appointed. The reason I was chosen was the PoA status. Not the same but the closest we can get to mum acting herself. Either if the professional trustees have been any good. The first withheld information and the current one is leaving it all for me to deal with. There have been family issues and a claim against the estate so the firms I’ve spoken to say it’s too high risk for them.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82139196#Comment_82139196

If there are no funds to pay their fees (eg the only asset is the house) you can understand the current trustee doing as little as possible, but you would still need both trustees to sign things in order to do anything validly. In reality it is not uncommon for one trustee to be more active than others and you then have formal trustee meetings (or round robin written resolutions) to make the decisions.

Heedtheadvice

I do not think I can help you much MistySky.

However if you do want help and quickly I urge you to set everything out without holding back details as that will be important for others to give pertinent responses.

So far you are drip feeding information and everyone is needing more info. As an example you now mention a claim against the Estate. Is that your father's Estate and is the property in part or whole within that estate....just one question of which there will be several I expect.

xylophone

Is the situation that your parents set up "inter vivos" settlor interested trusts?

They were the owners of a property as tenants in common and each of them gifted his/her share into trust

that at the discretion of the Trustees could benefit the settlor or any of a class of beneficiaries?

How does your father's estate become involved?

MistySky

https://forums.moneysavingexpert.com/discussion/comment/82139188#Comment_82139188

mum has moved already and currently in rented accommodation. No one has explained about tax implications at all. I’m aware that it doesn’t achieve anything that was the basis for them setting it up in the first place. It’s a very sad situation and an absolute nightmare for me trying to sort it out without any support.

MistySky

https://forums.moneysavingexpert.com/discussion/comment/82139227#Comment_82139227

He knows he will be paid. There is no money for legal advice either but it has been necessary! Same with a claim against the estate. It all has to be paid for somehow. I’d prefer the professional trustee to be the one doing more work but then the fees would be racking up, you are right on that front!

MistySky

https://forums.moneysavingexpert.com/discussion/comment/82139281#Comment_82139281

Exactly! Sadly, my solicitor was happy to have the money to reply even thought there was arguably no need. I complained to the solicitor that wrote about the claim because they had given bad advice based on the fact that the Will clearly states that everything goes to my mum. I should have complained before we responded, but obviously it’s quite stressful!

MistySky

https://forums.moneysavingexpert.com/discussion/comment/82139244#Comment_82139244

It is an extremely long and complicated saga so hard to know what bits are relevant. So advice on and information about tax have been very useful so whatever I can get from this thread is great!