Confusion around a trust in a will.
Discussion
My FIL sadly passed away last year, survived by the mother in law.
The family have some confusion around his Will and they have a zoom call with professional that set it up next week.
The thing we’d really like help with is what questions should we be asking this guy.
As we understand it at the moment his half of the estate has been placed in a trust of their 3 children as long as mum survives. I would class it as a normal size estate not millions, just family 3 bed home.
The trust has confused everyone on how to move forward for probate.
The family have some confusion around his Will and they have a zoom call with professional that set it up next week.
The thing we’d really like help with is what questions should we be asking this guy.
As we understand it at the moment his half of the estate has been placed in a trust of their 3 children as long as mum survives. I would class it as a normal size estate not millions, just family 3 bed home.
The trust has confused everyone on how to move forward for probate.
I’m guessing that your late FIL’s Will was dated before 2007?
So called ‘Will Trusts ‘ were once a common IHT mitigation on first death, but the rules changed in 2007 and in the vast majority of cases, there is no longer any benefit in following through with them (as the estate of the first death can pass to the survivor with no IHT downside).
If all parties can now agree (i.e., the survivor and the three children), it should be possible to vary the Will and come up with an alternative ‘distribution’ that will remove the requirement to set-up and manage a Will Trust.
So called ‘Will Trusts ‘ were once a common IHT mitigation on first death, but the rules changed in 2007 and in the vast majority of cases, there is no longer any benefit in following through with them (as the estate of the first death can pass to the survivor with no IHT downside).
If all parties can now agree (i.e., the survivor and the three children), it should be possible to vary the Will and come up with an alternative ‘distribution’ that will remove the requirement to set-up and manage a Will Trust.
Mogul said:
I’m guessing that your late FIL’s Will was dated before 2007?
So called ‘Will Trusts ‘ were once a common IHT mitigation on first death, but the rules changed in 2007 and in the vast majority of cases, there is no longer any benefit in following through with them (as the estate of the first death can pass to the survivor with no IHT downside).
If all parties can now agree (i.e., the survivor and the three children), it should be possible to vary the Will and come up with an alternative ‘distribution’ that will remove the requirement to set-up and manage a Will Trust.
So called ‘Will Trusts ‘ were once a common IHT mitigation on first death, but the rules changed in 2007 and in the vast majority of cases, there is no longer any benefit in following through with them (as the estate of the first death can pass to the survivor with no IHT downside).
If all parties can now agree (i.e., the survivor and the three children), it should be possible to vary the Will and come up with an alternative ‘distribution’ that will remove the requirement to set-up and manage a Will Trust.
I am interested about using the option of variation. How in practice, would one half the estate be turned into cash?
Maybe I have misunderstood, but presumably such family discussions arise, because the children might like some money now.
If almost an entire estate consists of just a parents' home, then a widow would have to sell to realise half cash.
I thnk most 'life use' trusts must be implemented, to ensure a bereaved spouse can continue living in the family home if so desired.
Is your variation suggestion, something which is easier in theory, than practice ?
Imagine an instance where 3 children persuade one bereaved mother, how it would be a good idea for her to move into a small flat.
Probably not something the father intended.
Edited by Jon39 on Saturday 4th March 07:50
@jon39 - the intent of the original will will almost certainly have been to pass the estate to the surviving spouse, not to the children. The trust was a mechanism to minimise tax. The idea of "getting their money sooner" is likely to be at odds with the intent of the will. It's likely the FIL wouldn't have anticipated his kids receiving much if any of his estate until his wife died. So the variation wouldn't be too start giving money to the kids now; it'd be something like letting the whole lot pass to the MIL without bothering with the trust.
It was set up in this way to protect a percentage of the value of the house (50%) normally)
The deceased 50% has been left in trust of the children and is "ring fenced" if the surviving partner ends up in a care home.
The property cannot be sold at the moment as the surviving partner lives there.
If there is more than £23350 (?) of asset in the estate 100% of any care home fees will have to be paid.
This amount that can be clawed back from the surviving partner is reduced to their share of the property (50%) and cash assets ...
It is a mechanism to protect the estate for the benefit of future generations, irrespective of the monetary value.
Get professional advise before making any changes as it could be a costly decision.
The deceased 50% has been left in trust of the children and is "ring fenced" if the surviving partner ends up in a care home.
The property cannot be sold at the moment as the surviving partner lives there.
If there is more than £23350 (?) of asset in the estate 100% of any care home fees will have to be paid.
This amount that can be clawed back from the surviving partner is reduced to their share of the property (50%) and cash assets ...
It is a mechanism to protect the estate for the benefit of future generations, irrespective of the monetary value.
Get professional advise before making any changes as it could be a costly decision.
Edited by ConnectionError on Saturday 4th March 08:23
ATG said:
@jon39 - the intent of the original will will almost certainly have been to pass the estate to the surviving spouse, not to the children. The trust was a mechanism to minimise tax. The idea of "getting their money sooner" is likely to be at odds with the intent of the will. It's likely the FIL wouldn't have anticipated his kids receiving much if any of his estate until his wife died. So the variation wouldn't be too start giving money to the kids now; it'd be something like letting the whole lot pass to the MIL without bothering with the trust.
Thank you.
As you say, the intention of the trust is usually fairly standard (spouse has use of home for life, then estate should pass to the originally named beneficiaries.
The whole subject can become an area of trip wires though.
Eg. Variation as you suggest.
Widow remarries.
Widow makes a will for the original entire estate.
Widow dies.
New husband might have full ownership, or life use of the home.
All kind of unexpected events could occur, breaking the intentions of the original couple.
Divorce could of course be another complication.
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