April King

Goldman2020 · 11 May 2019 at 8:32PM

Does anyone have experience of using April King for the writing of Wills?

Yorkshireman99 · 11 May 2019 at 10:12PM

{Edited by Forum team}

Good advice BUT those wanting a simple will don’t really need the knowledge and expense of a STEP member

SeniorSam · 12 May 2019 at 7:31AM

These sort of Wills are needed when a family wish to ensure that at least half of the family home will be past to the family and not lost where care costs have been needed for many years.

When a home is owned as Tenants in Common, (half each) the first to die can leave their half of the home to a child/children or grandchild ( 'Bloodline' ) in a Lifetime Interest Trust, as any other beneficiary not of bloodline would negate the new Residence Allowance that would normally be available. Therefore, when the second person dies, both inheritance tax allowance and residence allowance are fully available to set against inheritance taxes, less the value of the Will Trust gift.

You should ensure that if half of the home is gifted on first death, that the value at that time is not above the nil rate band allowance, otherwise tax would be payable at the time of the gift at 40% at anything above that rate, (presently £325,000)

When you have a property that may exceed the nil rate allowance, the Trust gift should be worded so that the maximum amount is no more than the nil rate band allowance of the half of the one who died and any additional value should be passed to the spouse.

The Lifetime Interest Trust is often referred to as an Interest in Possession Trust, which means that the spouse can remain at the home for their lifetime, or move home with the full value of the home being available for the move. If surplus capital were then available from the move, the Trust wording can include that such capital were to be held in Trust for the benefit of the spouse if needed.

The Trust interest is registered in the Land Registry, showing that the Trust holds an interest of half the property, or the value to the nil rate band allowance and that value can not be touched. It is' ring fenced' for the children or grandchildren absolutely.

Trustees can be family members, but you may prefer to have a professional Trustee, such as a solicitor to ensure your wishes would be followed, bearing in mind that the ongoing costs may be high, but remember that the wording of these Trusts needs to be very carefully done as errors can cause problems, so a competent solicitor would be best advice when considering complex Wills with Trusts..

pramsay13 · 12 May 2019 at 7:42AM

Some solicitors will write your will and you donate the money to a charity.
Providing it is reasonably straight forward this is a good way of getting a will and benefitting a local charity.

SeniorSam · 12 May 2019 at 9:52AM

We had a similar problem, but eventually decided to gift half the home to our two children equally, with Lifetime Trust for spouse and on the second death to split everything equally. It was previously that the older child allow a larger proportion to be made available for the younger to buy a flat, but then thought that it best to split in half and avoid any later problems. It really depends on the ages of your children and what remains in the 'Pot'. The pension pot is already in Trust as all pensions are, but that would also be split. Everyones circumstances is different but you do need to think carefully of ALL eventualities, of which, a good solicitor should advise you.

getmore4less · 12 May 2019 at 11:07AM

SeniorSam wrote: »

These sort of Wills are needed when a family wish to ensure that at least half of the family home will be past to the family and not lost where care costs have been needed for many years.

When a home is owned as Tenants in Common, (half each) the first to die can leave their half of the home to a child/children or grandchild ( 'Bloodline' ) in a Lifetime Interest Trust, as any other beneficiary not of bloodline would negate the new Residence Allowance that would normally be available. Therefore, when the second person dies, both inheritance tax allowance and residence allowance are fully available to set against inheritance taxes, less the value of the Will Trust gift.

You should ensure that if half of the home is gifted on first death, that the value at that time is not above the nil rate band allowance, otherwise tax would be payable at the time of the gift at 40% at anything above that rate, (presently £325,000)

When you have a property that may exceed the nil rate allowance, the Trust gift should be worded so that the maximum amount is no more than the nil rate band allowance of the half of the one who died and any additional value should be passed to the spouse.

The Lifetime Interest Trust is often referred to as an Interest in Possession Trust, which means that the spouse can remain at the home for their lifetime, or move home with the full value of the home being available for the move. If surplus capital were then available from the move, the Trust wording can include that such capital were to be held in Trust for the benefit of the spouse if needed.

The Trust interest is registered in the Land Registry, showing that the Trust holds an interest of half the property, or the value to the nil rate band allowance and that value can not be touched. It is' ring fenced' for the children or grandchildren absolutely.

Trustees can be family members, but you may prefer to have a professional Trustee, such as a solicitor to ensure your wishes would be followed, bearing in mind that the ongoing costs may be high, but remember that the wording of these Trusts needs to be very carefully done as errors can cause problems, so a competent solicitor would be best advice when considering complex Wills with Trusts..

Your knowledge is out of date the status of these will based lifetime trusts changed in 2006,
Now know as immediate post death interest trusts(IPDI)

The most common use of these IPDI trusts is to allow a spouse to live in the property.

If the life tenant is the spouse then it gets full spouse exemption (no need to restrict the amount to the NRB) going into the trust and counts towards the spouses estate when they dies when it passes to the remaindermen usually the kids.

the RNRB becomes transferable and any unused NRB also carries over.

NOTE. to get the RNRB(of either deceased) used against the qualifying part of the property in the trust the kids need to be direct descendants of the second to die.

SeniorSam · 12 May 2019 at 2:07PM

getmore4less, many thanks for the update on changes of the Trust name, although I feel that the result is the same in allowing the spouse to remain in residence and even move to another property using the assets of the whole property. I must try to be better informed as retiring 9 years ago, this has obviously slipped by.

Perhaps you can therefore qualify that if the Trust gift were to be made to children or grandchildren rather than to the spouse and the value was in excess of the nil rate band allowance, would tax be payable on the excess? That was my concern and I appreciate that this would not apply if it were to the spouse, but then that would not be the case if part of the property were to be kept out of the estate of the spouse for good reason.

getmore4less · 12 May 2019 at 6:29PM

A life interest trust to a spouse as life tenant has the same effect for most tax purposes as if it was given to the spouse.

The assets in the trust are ring fenced for most other purposes.

When the spouse dies, again for most tax purposes they own the assets in the trust.

Any assets that move out of the trust become PETS on the life tenant estate.

The life tenants being children changes everything but then the spouse has no interest in the property and the spouse exemption no longer applies.

As with everything else not going to spouse nil rate band gets used up.

SeniorSam · 12 May 2019 at 10:09PM

Thank you, it is as I thought and the reason for limiting the property gift in Trust to the nil rate band amount when given to the children and avoid tax having to be paid at that time. This at least keeps that part of the home safe and it cannot be attacked for care home costs, which may concern some.
Much appreciated.

getmore4less · 12 May 2019 at 10:21PM

SeniorSam wrote: »

Thank you, it is as I thought and the reason for limiting the property gift in Trust to the nil rate band amount when given to the children and avoid tax having to be paid at that time. This at least keeps that part of the home safe and it cannot be attacked for care home costs, which may concern some.
Much appreciated.

The key is the life tenant if it is the spouse the exemption applies even if the kids are the end beneficiary.

If the kids have a life interest then no spouse exemption but then it belong in their estates and you get other complications if they don't live there like CGT.

Buy more important the spouse has no control over part of the house they may want to live in and it can't be used for RNRB.

There is no point not having the spouse as the life tenant as the nil rate band is transferable if given to the kids it is used.

SeniorSam · 13 May 2019 at 7:41AM

That's logical. The spouse is the one who would be the life tenant and be protected in the home until they die. With the children as the beneficiaries, they do not inherit until the spouse has died, after which it would pass to the children together with any other assets that the spouse has left to them.

Perhaps you would be kind enough to clarify the point that if half the house is left to the children in Trust , with life tenancy for the spouse and that half value is greater than the nil rate band amount, would tax be payable then or not and why as it is a gift greater than that allowance.

April King

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