Codicil for property in to family trust

[Cloisters]

My parents in law created codicils in 1997 under advice from SJP to place their individual ownership portions (under tenants in common) of the family home in to trust on death up to the nil rate band.

My father in law died in 2003 and this was completed.

My mother in law survives, but with the change in the RNRB coming in this year and my understanding that trusts can not benefit from this, we are being advised by SJP (at a cost of £2,500) that we should consider changing the trust and they want t ocharge this money to review everything and make relevant changes.

Running the numbers, and due to the house price increases since 2003 I do not believe it would be financially viable to undo the existing trust and am not even sure if that would be possible.

However, it may be sensible to revoke the codicil in my mother in laws will that has the same effect of placing her portion of the house in to the trust.

My question therefore, is must we make this will change prior to death or can it be done as a deed of variation please? If I do not need t otrouble her in advanced old age I prefer not to. If there is anything else that may be relevant to the above please comment.

Many thanks in advance.

[maths]

I feel that updating the will (whether by way of codicil or possibly a brand new will) is the best option.

However, I appreciate your comment that you would prefer not to trouble your mother in law. In this event, to take advantage of the new RNRB on her death would simply require that the trustees following the death of your mother in law simply appoint the interest in the property outright to say her children (or any lineal descendent) within a 2 year period of death (effectively the trust terminates at that point).

As father in law died pre April 2017 his RNRB may be transferred to his surviving spouse on her death (beware of the £2 million cap).

With respect to father in law's trust it should be possible to appoint the trust assets to one or more of the beneficiaries without too great an IHT charge.

I have no idea as to the facts of the case and numbers involved hence it's difficult to comment on the fee of £2,500.

[Cloisters]

Maths, thank you for the reply. When you say my father in laws trust could avoid too much iht could you please clarify as I thought it was iht free? It was a nil rate at the time and I thought growth within the trust was tax free of both cgt and iht as possession had not been taken as my mother in law still lives there? Interesting about assigning the property to the descendants thank you that's what I had hoped. We may see if the codicil is practical thanks

[maths]

Would you know regarding father in law's trust whether his 50% interest in the home was settled on trust OR wether a so-called debt or charge scheme was adopted ?

[Cloisters]

Hi I believe the house was put into tenants in common in unequal shares to represent the nrb and then on death his share at the time circa 80% value of house was settled in to the trust.

[Lee Young]

Its very difficult to provide any useful comment without sight of the paperwork and also the details of the extent of your mother in law's estate. The residential nil rate band might not benefit you anyway, or the existing trust might not have an impact on it.

The papers should all be reviewed, and there will be a cost to this if it is done properly. As maths writes, difficult to comment objectively on the level of the proposed SJP fee without the detail. Its ten hours of my time and I'm pretty sure it wouldn't take me "that long" to review an existing will trust and comment on its efficacy bearing in mind the new rules.

[Cloisters]

Yes thanks I think that may be wise. We are trying to get everything together but it may take a while and I am reassured that it appears we could deal with matters after the inevitable within 2 years via a DoV, especially as the government is likely to be fiddling constantly and anything we do now might need redoing (mildly frustrating that the cost of setting this all up seems to now be pointless and that we will probably now pay to have it indone but what else can you do?
That said, it would probably be wise to consider a consultation ideally with someone who could carry out the relevant bits and pieces for probate when it occurs so we have a joined up approach. My mother in law wants to add a codicil anyway to leave small sums to grandchildren that were not in her original will, so we could combine things.

I am assuming it would be far easier to find someone who she could physically visit (she is quite disabled now) but I could consider sending documents electronically I suppose.

If anyone around HA4 (Ruislip) has the relevant knowledge and is to chat more about the detail to work out the best way forward please private message me and I will get in contact IDC.

Many thanks,