Property in Trust, will states give all to individual person? Trying to do probate myself
skipfeeney
Posts: 121 Forumite
Hi,
My mum has recently passed away and i am trying to work out if i can deal with the will / probate myself as an executioner.
One complication is that her and my dad set up a family trust with the sole aim of preventing property being sold for care fees. I have the trust documents and they are listed as "Settlors". i am listed as a Discretionary Beneficiaries.
On the land registry the property is owned by mum and dad as trustees of the family trust..so it says the following:
Registered Owneres: Name 1, Name 2
as trustees of the Feeney Family Trust.
So the house is part of the trust. However on my mums will (created at same time of the trust) it states "I give my Residuary estate to my husband - name"
What exactly does that mean? Does that mean the house is removed from the trust and goes solely to my dad. Just to add, my dad does not live there, they lived apart so wants to sell it have the money.
Thanks
My mum has recently passed away and i am trying to work out if i can deal with the will / probate myself as an executioner.
One complication is that her and my dad set up a family trust with the sole aim of preventing property being sold for care fees. I have the trust documents and they are listed as "Settlors". i am listed as a Discretionary Beneficiaries.
On the land registry the property is owned by mum and dad as trustees of the family trust..so it says the following:
Registered Owneres: Name 1, Name 2
as trustees of the Feeney Family Trust.
So the house is part of the trust. However on my mums will (created at same time of the trust) it states "I give my Residuary estate to my husband - name"
What exactly does that mean? Does that mean the house is removed from the trust and goes solely to my dad. Just to add, my dad does not live there, they lived apart so wants to sell it have the money.
Thanks
0
Comments
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Putting the home into trust was a big mistake. It does not form part of your mother’s estate for distribution purposes, and almost certainly would have failed in its principle purpose as it would have been treated as deliberate deprivation of assets.
If your father is now in need of the equity tied up in the house you are going to have to take professional advice on winding up the trust0 -
Ok, so the house is not part of the estate then? If we instructed a probate solicitor what would happen with the house as the probate solicitor is only dealing with the estate?
To clarify he doesn't need the equity - it would just be sat in his bank account / invested.
Looking at the trust document it states:
If Name1 dies during the trust period the trustees shall pay the income of the share to Name2 for the duration of Name2s life.0 -
skipfeeney wrote: »Ok, so the house is not part of the estate then? If we instructed a probate solicitor what would happen with the house as the probate solicitor is only dealing with the estate?
To clarify he doesn't need the equity - it would just be sat in his bank account / invested.
Looking at the trust document it states:
If Name1 dies during the trust period the trustees shall pay the income of the share to Name2 for the duration of Name2s life.
You should still be able to do the probate yourself, but you do need an expert to look at the trust.
The will would appear to say that the trust should now be used to provide income to your father, either through renting it out or selling and investing. However managing an income generating trust is subject to taxation and as a trustee you are responsible for that, so I would do nothing on the trust front without consulting an expert.
I don’t know if this is possible, but personally I would try and unwind the trust and get at least half the assets back to your father. I know he was trying to avoid care costs but being able to self fund is a better option than an over my dead body type care home that you could end up in if you rely on LA funding.1 -
If the property was owned as Tenants in Common, then what was gifted into Trust was his half of the home. There would normally be a clause allowing the survivor to remain in the property for their lifetime, at the end of which, the family Trust (half of the home) would pass to the beneficiaries.
It would seem that if your mother had died first, then the arrangement was that her half of the property would pass to your father and not into a Family Trust. Your parents probably had a good reason for this to be set up that way rather than in the more usual way of each half passing into Trust on first death.
Trustees would normally be both parents and others, but the reason for the Trust was to protect at least half of the home from being attacked under any circumstances and ultimately pass on to the family. There is no deprevation of assets as the gift was upon death.
These days, that sort of arrangement is not so popular as in gifting half the home to Trust, the benefit of Residential Allownace on that half is lost and when both allowances are available, from 2020, that could mean £500,000 allowance each (IHT allowance and Residential).
If consulting solicitors, do make sure that the solicitor is STEP qualified, as many solicitors, as well as lay people, do not fully understand Trust arrangements.
Finally, a discretionary beneficiary means that you are intended to be the beneficiary, but where Trusts are involved with a Discretionary Trust, then ultimately the Trustees can direct the benefit elsewhere. That can be helpful if the beneficiary did not really want the asset but wanted it passed to 'say his children'
When this Trust was set up, it would appear that the solicitors did not account for lifetime continuance for the spouse if your father had died first. I would hazard a guess that he was not STEP qualified, as that was an important point, which fortunately was not needed in this case.I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0 -
The residue of a persons estate means any other assets. So in this case, other investments or possessions other than the house.
Having read your thread again, it seems that it was a normal Trust where whoever dies first, the half home of the person who has died, goes to a Trust to protect it. That would then pass on to beneficiaries when the second person dies. Do the Trustees appointed include you or other family members?I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0 -
One complication is that her and my dad set up a family trust with the sole aim of preventing property being sold for care fees. I have the trust documents and they are listed as "Settlors". i am listed as a Discretionary Beneficiaries.
It looks to me that the whole house went into the trust.
any other assets in the trust?
The trust provides a life interest for the survivor
If they were not also discretionary beneficiaries he probably can't cash it in just retain the benefit of the asset.
Need to check when the trust was set up is the gift to the trust counts as a gift with reservation(probably does if she lived there) so need to be included in the taxable estate, also need to establish the beneficial status for CGT and IHT
Then you need to check what happens to the nil rate bands it may be they are not used, get spouse relief(from the life interest) or get used up.
What you probably can do is dad give up his life interest , you dissolve the trust and let him have the money.
or he takes a loan to be repaid on death.
The tax implications of all the actions and current set up need clarifying and I suspect you will be best paying for advice on this there is a lot going on.0 -
If the property was owned as Tenants in Common, then what was gifted into Trust was his half of the home. There would normally be a clause allowing the survivor to remain in the property for their lifetime, at the end of which, the family Trust (half of the home) would pass to the beneficiaries.
It would seem that if your mother had died first, then the arrangement was that her half of the property would pass to your father and not into a Family Trust. Your parents probably had a good reason for this to be set up that way rather than in the more usual way of each half passing into Trust on first death.
Trustees would normally be both parents and others, but the reason for the Trust was to protect at least half of the home from being attacked under any circumstances and ultimately pass on to the family. There is no deprevation of assets as the gift was upon death.
These days, that sort of arrangement is not so popular as in gifting half the home to Trust, the benefit of Residential Allownace on that half is lost and when both allowances are available, from 2020, that could mean £500,000 allowance each (IHT allowance and Residential).
If consulting solicitors, do make sure that the solicitor is STEP qualified, as many solicitors, as well as lay people, do not fully understand Trust arrangements.
Finally, a discretionary beneficiary means that you are intended to be the beneficiary, but where Trusts are involved with a Discretionary Trust, then ultimately the Trustees can direct the benefit elsewhere. That can be helpful if the beneficiary did not really want the asset but wanted it passed to 'say his children'
When this Trust was set up, it would appear that the solicitors did not account for lifetime continuance for the spouse if your father had died first. I would hazard a guess that he was not STEP qualified, as that was an important point, which fortunately was not needed in this case.
Thanks for the update. So do you believe the property falls under my mums will or outside of that because it is in a trust. Just to reconfirm - my dad doesn't live there. He has his own house and i am sure his property will be in the trust as well.
Would i get a STEP solicitor to just sort the trust out or manage the probate as well?
The value of the property is actually quite small so won't be hit by IHT.0 -
Yes! STEP should be able sort it.skipfeeney wrote: »Thanks for the update. So do you believe the property falls under my mums will or outside of that because it is in a trust. Just to reconfirm - my dad doesn't live there. He has his own house and i am sure his property will be in the trust as well.
Would i get a STEP solicitor to just sort the trust out or manage the probate as well?
The value of the property is actually quite small so won't be hit by IHT.0 -
A STEP solicitor will undoubtedly clarify matters for you. It is all to do with how your Mother's Will is written, as it is her assets we are talking about and how your parents owned the house. If it was as Tenants in common, then you Mum only owned half of the house and that half would now be in the ownership of the Trust, under the Trustee's names for the benefit of the beneficiaries named when your Father dies.
However, as your Father lives elsewhere, there could be a possibility that your Parents gifted the property into a Family Trust earlier on, in which case, you should consult with STEP solicitors.
It is not clear in your questions and unless you can understand the Will and Trust documents, professional advise would seem essential.
SamI'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0 -
skipfeeney wrote: »Would i get a STEP solicitor to just sort the trust out or manage the probate as well?
You can employ a solicitor to do as much or as little as you choose. If you are confident with the probate then it's probably best to keep that to deal with yourself and keep more money for the beneficiaries.0
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