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Property Trust Will
Mr J
Posted: 17 June 2018 10:50:24(UTC)
#21

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Jon Snow on 17/06/2018(UTC)
Samual Saunders
Posted: 17 June 2018 11:07:26(UTC)
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Mr J

There are a number of allowances that need to be looked at when someone dies but this particular question was in respect of the Property Will Trust and delving into other Trust areas can be very confusing.

In addition to the 14 year rule, there may be taxation of some Trusts depending on the construction of the Trust and type of assets held.

This is a reason to obtain the services of a STEP solicitor rather than the local solicitor who may not be fully qualified to advise a client on various types of Trust.

There are many Government sites where more information can be found if required.

Sam
Jon Snow
Posted: 17 June 2018 23:57:32(UTC)
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OK, here I go -

This is a complicated and confusing issue for many of us, so the advice to get a professional on board is well intended.

From my experience and some observations that I expect to be corrected on -

Rant at the legal profession -

Formal trusts are a bloomin nightmare (despite what the professionals say, well they would say that wouldn’t they) and if you wrap one up in a will too…my aunt has just spent 2 months unwinding her late husbands 36 page will.

My late mums will (1989) ran to 3 pages, my wifes dads will (2015) ran to 15 pages and most of it is legal jargon.

Interesting article about will writing “services” and banks etc. appointing themselves as executors and their estate administration charges (2.5% +) here -

http://www.dailymail.co....ons-rip-testaments.html

I did my dad, mum and father in laws estates, it’s not rocket science, if you have the time, it is an interesting journey, 2.5% of the estate when folks are at their most vulnerable, that is just despicable and immoral.

Things I think I know about IHT

You can give away £3,000 each year and it will fall outside your estate immediately.

You can give an assortment of minor gifts that I won’t get into here, again outside your estate immediately.

You can give gifts out of excess income, again outside your estate immediately. Keep decent records!

Beyond that any gifts that you make without reservation greater than 7 years before you die are outside your estate.

Gifts that you make without reservation within your last 7 years are deemed PETs (potentially exempt transfers) and taper relief may be available BUT only on the gifts exceeding the NRB, complicated!

Gifts that you make with reservation, such as transferring your share of the family home to a trust need to be treated with care, if you do gift and you continue to reside in the family home then you need to demonstrate that this is a commercial arrangement and you will need to demonstrate that you pay the trust the market rental rate for your share of the property. Bad news for ordinary people, not so bad for MP’s though, remember this classic -

https://www.telegraph.co...ldren-MPs-expenses.html

If you create a formal trust to move some of your assets outside your estate I recall there are significant charges (20%, thanks Gordon) at creation and the same every 10 year thereafter. I may be a bit rusty on that.

I think anything you can do to protect your assets such as pay into your ISA, max your SIPP, get some VCTs, etc, you should be doing now.

The taxman is coming, he told us today £20Bn for the NHS, ignoring the arguments about efficiency, we the tax payers will pay for this, as usual.

3 users thanked Jon Snow for this post.
Jeff Liddiard on 18/06/2018(UTC), Tim D on 18/06/2018(UTC), Mr J on 18/06/2018(UTC)
Jeff Liddiard
Posted: 18 June 2018 15:49:11(UTC)
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Hi Jon

Re your comment below, I've not found anything yet that says about paying a commercial rent when half the value of the main residence is left in Trust on the first death. I can see that this would apply if the whole house was gifted to the children or whomever because of the clear benefit of living in a home free of rent that you do not own. The whole Trust thing is starting to feel like more trouble and possibly more cost than it's worth in our case. However, we will be seeing a solicitor who specialises in Wills and Trusts and are preparing a list of questions for her. It's proved very useful starting this topic.

'Gifts that you make with reservation, such as transferring your share of the family home to a trust need to be treated with care, if you do gift and you continue to reside in the family home then you need to demonstrate that this is a commercial arrangement and you will need to demonstrate that you pay the trust the market rental rate for your share of the property.'
Samual Saunders
Posted: 18 June 2018 16:53:07(UTC)
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Jeff, a little more information that may help you and John

In the initial trust we discussed, when half the home is owned by the one who dies first, the remaining spouse does not have to pay any rent and has a lifetime interest. In other words, no cost to the surviving spouse and they can still change houses at any time without a problem. It will always be the 50% owned by the Trust.

If the property were gifted to someone else, then full market rent would need to be paid to avoid the gift with reservation.

As long as you have a STEP qualified solicitor there will not be a problem. It is not as complex as you think.

Sam
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