Helps with wills, (complicated)

alm721

Firstly apologies if this is in the wrong place, please feel free to move if necessary I was unsure where would be the best place to post.

Right please bear with me this is a bit of a long one.

My hubbys parents are quite wealthy and prob have assessts of around 4million. My hubby has siblings and my parents in law plan to leave things pretty much slipt equally between them with some prehaps left directly to grandchildren,. The problem is that one of the siblings is horrendous ( really really horrendous) with money. They are constant in debt, live beyond their means and spend everything they have as soon as they get it.
Understandably my paretns in law are concerned that anything they leave to this sibling will bw squandered very quickly. (I think they are probably right in assuming this). So they have decided that in order to prevent this they will leave everything in trust to the siblings so that one of them can not do anything without the others agreement. My parents in law want all of their houses etc to be kept by the family and none sold with the intention that it will pass down to grandchildren etc.
Seems ok but we have some conerns, as you can imagine.
So Im just wondereing does anyone know what you can and cant do with a trust, how long you can set them up for etc. Due to the relativly large and growing number of grandkids it seems silly for them to have so many part shares in something which will obviously get worse as assesst pass down the generations of you see what I mean. Also the sisblings do not particulaly get on and I know beyond all doubt that if they are to jointly hold property it will lead to the breakdown of the realtionships completely.
Can anyone offer any advice?
Thanks

localhero

Hi Alm 721,

Without professional advice, this situation is a recipe for disaster - the likely result is a huge amount of that estate going to solicitors to resolve the ensuing fallout.

First of all, English law does not allow a private trust (as opposed to charitable) to be perpetual. It must come to an end and the capital vest in a beneficiary within a limited period of time.

There is a common law period which is a life plus 21 years, but today most settlors and their professional advisers use the Perpetuities and Accumulations Act 1964 and adopt a fixed period of anything up to 80 years.

In situations such as this, (and in particular where there's a large number of grandchildren and possibly more to follow) the solution is to leave the estate to a discretionary trust with the children and grandchildren as potential beneficiaries (or just all of the grandchildren if their intention is to skip a generation).

This allows the trustees enormous flexibility to decide who, when and how much each potential beneficiary receives. No beneficiary of the trust has the right to any part of the trust fund (only the right to be considered annually).

The most important decision is selecting suitable trustees. I would strongly advise against appointing any of their children as trustees as this will almost definitely result in conflict - as there are too many competing claims - and in any case one of the children would not make a suitable trustee.

The best choice would be to appoint 2 or 3 completely independent and trustworthy people who are not potential beneficiaries. If there's no suitably impartial friends or relatives it would probably be best to appoint professionals such as solicitors to the task.

Please urge your in laws to seek decent professional advice as there's also tax issues to consider. A great deal of inheritance tax is at stake and this could be minimised with some sensible estate planning. Your in laws should also choose their advisers carefully as the quality of solicitors in this area varies enormously. If you require a recommendation please pm me.

Best wishes.

margaretclare

Having some experience in the past of disagreements within families (although nothing like this level of wealth!!!) I must agree with localhero - this sounds like a recipe for disaster.

I can never see the reasoning for parents 'wanting houses to be kept by the family and none sold with the intention that it will pass down to grandchildren'. Who's going to take care of the house(s) for all that time? And the siblings don't get on now, you say - that's nothing to how they 'won't get on' when pound signs start to whizz around in front of their eyes and the words 'my share' and 'my inheritance' start to be bandied around. Tin hats on, down below the parapet, boys - war will break out!

As I said, I speak from some (bitter) experience.

Margaret

alm721

Thank you both for the replies. To be honest this is what really worries me. I know the fallout from this will be enormous and will without doubt destroy the already precarious relationships within the family. The reasons for not wanting the kids to sell anything seems to come from a bit of snobbery to be honest. They want to know that their 'estate' is still intact iyswim. Also they want to prevent the sibling whos bad with money from selling all their sharing and blowing the lot. I've told them they should sell it all and spend the lot but in reality that wont happen. With regards to the tax situation I really think that they have the opinion that once they've gone then its up to the kids to sort it out! I don't know that theres much I can do as I think they may question any advice I may give them given that my husnband is their son, but thought that with a bit more knowledge I may at least be able to get them to think about the problems this will cause.
Thanks

localhero

I agree it is a tricky topic to discuss with your parents (or in-laws), but somebody needs to alert them to the fact they need to obtain decent professional advice. (Without appearing to be interfering.)

Unfortunately, the head in the sand syndrome is all too common, and all these potential problems and heartache can be eliminated with a very small investment of time and money.

I hope for the entire family's sake that they see sense. Perhaps a friend or somebody who's judgement they trust can be encouraged to have a word with them.

Good luck.

CORGIH

My mum died last week. I have lived with her all of my life but over the past 8 years or so, I have been her carer. I have paid the majority of the bills and been responsible for decorating and cleaning the house. My mum told my aunt that she wanted me to have the house and to continue living in it and my 2 siblings could have everything else between them. However, today my siblings have told me that they want me out. There is no way that I could afford to buy a house and I just don't know what to do. Do I have any rights at all to stay in the house? I know it is what my mum wanted but she didn't make a will and I can't believe that after all of these years of caring, I could be made homeless. If anybody can offer me any advice it would be greatly appreciated.

localhero

First of all I'm sorry to hear about your predicament.

If that is what your mother wanted, why on earth didn't she make a Will? Also are you sure there isn't a Will somewhere? (ie her bank/her solicitor/with your aunt or somebody else she may have trusted.)

If a Will cannot be found, then you and your siblings will have to share the estate equally (including the house you're living in). The only way you can prevent the house being sold to pay out the other beneficiaries is if you are able to buy out their shares - perhaps with a mortgage.

If you have contributed towards paying for or improving the property in some way, then you may own a small percentage of the property by acquiring a beneficial interest, but that won't be enough to give you a right to remain in the property.

I'm sorry I can't provide a more positive answer.

CORGIH

Thanks for your help. I think I put my question in the wrong bit and I should have started a new thread - it's lucky you saw it! Honestly, my brain must have turned to cotton wool!

Thanks again!