CGT/Inheritance Tax

harryhound

I think a lot of people are fair minded enough to agree that the yield of (half?) a family home that has been rented out after their mother/father has gone into a care home should be used to help pay the bill.
It is the idea that the council/home can simply dump ever increasing liabilities against the value of the property until it is virtually all gone, that sticks in the throat.
Especially if they use "assumed yields", when doing the means test and do not use the actual figures.

localhero

Precisely Harry. Married couples need to understand that they can quite legitimately preserve the capital of their home (and other assets too), with a well written Will.

Of course, if the property gets rented out, some of the income will have to go towards the care fees -they can't have it all ways.

dawna wrote:

[FONT=&quot]The life interest is part of a persons's estate for IHT and therefore the LA may argue it is also part of their estate for care home funding.[/FONT]

I can't see that argument succeeding. When somebody is means tested for care fees it is based on what they actually own. What the IHT position is is irrelevant.

dawna wrote:

[FONT=&quot]re: the point about trustees meetings. There is no requirement for any trustees to have meetings, whether the trust is discretionary or not. Some do, some don't.[/FONT]....[FONT=&quot]In both cases, it depends on whether or not there were reasons to meet, or whether there were professional trustees.[/FONT]

insured wrote:

[FONT=&quot]dawna is right about the trustees meetings. The requirement to have trustees annual meetings is no more onerous on a DT than on the trustees of life interest trusts. It depends on what is in the trust. If all that was in there was a house, then there would be really no need for meetings.[/FONT]

You are both talking rubbish.

It is not compulsory for the trustees of a life interest to hold meetings. Where there is a discretionary trust however, it is compulsory for all the trustees to hold an annual meeting, irrespective of whether they are professional trustees and what assets form the trust fund.

The legal duty of the discretionary trustees is to consider all of the beneficiaries and decide whether or not to appoint capital or interest to any of them. Where the trust fund has been loaned to a surviving spouse, they must decide whether or not to call in that loan.

If the discretionary trustees fail to consider the range of beneficiaries, they are in breach of trust.

Therefore a property trust is simpler and much cheaper to administer than a discretionary trust. Families no longer need to be fleeced by lawyers between first and second death on trust administration and dealing with probate.

dawna wrote:

My trust knowledge is out of date now

That's something of an understatement. As a solicitor, I am surprised you were unable to research the issue a bit better and state the correct facts. In fact there are several people on this forum lately peddling all sorts of nonsense about trusts, which isn't particularly helpful.

Baggysdad correctly stated the case which provides legal authority for married couples to legitimately safeguard their entire homes from care fees, and I hope you find it of interest.

dawna_2

Local Hero, Where did I say that it was compulsory for trustees in a life interest trust to hold meetings?
It is compulsory in neither life interest trusts or discretionary trusts. The decision lies entirely with the trustees.
Baggsysdad, if you are referring to the case of the CAO v Palfrey, that case does not help here.
That case says the value of jointly owned assets is nil.
As both trustees and survivor would be not be joint owners, but each own their separate half, this does not help.
Nevertheless, local hero, whether or not you can see the argument about a life interest trust suceeding is irrelevant to STEP who are the acknowledged experts in this area.
You are right on one thing however, there is much rubbish peddled about trusts and wills on this forum, and it really serves no purpose discussing it here, that is why anyone who is considering such an arrangement should visit a solicitor who has a specialist private client department (not a high street solicitor) who will have STEP members.

Baggysdad

Baggsysdad, if you are referring to the case of the CAO v Palfrey, that case does not help here.
That case says the value of jointly owned assets is nil.
As both trustees and survivor would be not be joint owners, but each own their separate half, this does not help.

True, but this case concluded that the value of a share held as tenants in common should be treated in the same way as a share held jointly:

http://www.rightsnet.org.uk/pdfs/cis/263_97.pdf

B