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Where Taxpayers and Advisers Meet

Changing a Declaration of Trust

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am
Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 11:43 am

Hi,

Wondered if anyone may have any input they can help with an inheritance tax/probate question. My husband recently passed away, his estate was left to myself, mainly through joint assets. We have three children all under 18. His parents have now informed me that my late husband has a small percentage in a rental property that they have owned for years, this is formed as a declaration of trust. The in laws have asked that I now include this asset in his probate return and forward a copy of his will and grant of probate to their solicitor so that his small share (estate) can be put into the beneficiaries names. We knew nothing of this arrangement, we have never received any documentation about this or any money.
I am worried now as this is nothing I knew about. the thing is my husbands estate in his name only is less than £5000 so I haven't needed probate, my solicitor was quite clear on this as everything was joint owned. My in laws are very guarded about the situation, but I am worried.

Thanks

Bow

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Changing a Declaration of Trust

Postby maths » Sat Aug 01, 2015 2:07 pm

There is nothing to worry about.

From what you have said most of your husband's assets were jointly owned (presumably) with you. Thus, his interest in those assets automatically pass
to you and there is no need for probate with respect to these assets.

Did he make a will?
If so was the interest in the rental property mentioned and who did he appoint as executors?

If no will, then who are his parents saying inherit his interest in the property?

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 5:25 pm

Thanks so much for your reply and information that's put my mind at rest. My husbands death was so unexpected, we are both under 50 so our wills were very simple mirror wills. We gave it great thought but as we have dependant children we felt if something happened to either of one of us then the survivor parent would look after our children's interests.

We were completely unaware of the rental property and left everything to each other, we never mentioned anything as we didn't know it include it.
My in laws solicitor wants to know who are the beneficiaries in my husbands will, it is me and then if I should pass its my children who would be looked after by their god parents, who are named as guardians.

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 5:26 pm

Sorry meant to say I am the executor for my husbands will.

Bow

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 6:07 pm

Sorry I keep posting, the more I think, the more I seem to wonder!!
The in laws are wanting our children to inherit my husbands share, but I'm worried as my youngest is only 10 who will look after this for them. My husband also has a son from a previous relationship who is 21 and doesn't live with us.

If only we had known about this, also should my husband have paid any tax or if it's sold will I be liable for the inheritance tax portion of it out of my £650k. Could my in laws not just change the trust to portion it out as they want.

Thanks

Bow

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Changing a Declaration of Trust

Postby maths » Sat Aug 01, 2015 6:36 pm

Mirror wills are best avoided but I appreciate it's a bit late now.

However, from what you say, if you inherit your husband's complete estate this would include his interest in the property whether you knew about it or not.

Legally, your husband's parent's wishes as to the property interest are irrelevant. You have inherited the interest in line with your husband's clear wishes and you can do as you see fit with it.

As your husband left everything to you (ie his spouse) no IHT arises on his estate (including the property interest).

The interest in the property for capital gains tax purposes is acquired by you at its value as at the date of death of your husband. If you sell or gift it you will have a CGT exposure but unless the property has rocketed in value will basically be de minims if not zero. IHT exposure is not really an issue assuming you are healthy.

I would suggest, if I may, that you inherit the interest as planned. That you therefore request parents' solicitor to ensure that you are a named beneficiary at Land Registry; if they are difficult instruct your own solicitor to do it.

In time, once matters settle, you can then decide what to do (eg keep it; settle it on trust for your children equally etc).There is no rush.

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 7:01 pm

Thanks your explanation is clear and I had an idea this maybe the situation but now understand their reservation about discussing it with me sooner.
My late husband has only has a shared interest with his sister and mother apparently, but her will states he has a beneficial interest and its registered with the land registry.

Do you know can the declaration of trust be altered by my in laws or would I be able to transfer it when my youngest reaches 18, equally split between our three children and my step son. I think this fair.

I will speak to their solicitor on Monday.

Thanks so much for your help.

Bow

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Changing a Declaration of Trust

Postby maths » Sat Aug 01, 2015 10:17 pm

Do you know can the declaration of trust be altered by my in laws or would I be able to transfer it when my youngest reaches 18,
equally split between our three children and my step son. I think this fair.
Effectively a new declaration of trust needs to be executed by those who are the legal owners (possibly parents and sister) and lodged with Land Registry; the new declaration would replace your husband's name with yours.

Parents' solicitors could do this.

Thus, you would then own a % of the property. I would at this stage perhaps do this.

At anytime thereafter you could transfer your interest to your children 25% each. This could be done by you simply executing a Declaration of Trust in their favour.
Under this approach you don't need to wait until youngest reaches age 18.

Tell their solicitor what you want to achieve and await their advice; you could always return to this website and someone will no doubt respond.

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Sat Aug 01, 2015 10:38 pm

Thanks that is great advice, you have made is so simple.
Will contact solicitor on Monday and take it from there, thanks for your time and patience explaining.

Thanks

Bow

Bowly70
Posts:9
Joined:Sat Aug 01, 2015 11:29 am

Re: Changing a Declaration of Trust

Postby Bowly70 » Mon Aug 03, 2015 6:01 pm

Spoke with in laws solicitor today who has commented that the declaration of trust was for tax year 14/15 and to avoid paying income tax. Solicitor is forwarding a valuation for the value of the % on trust for my late husband, not sure what to do with that??
Solicitor commented that the trust is irrevocable. Yet the in laws commented that it's for the grandchildren and I am going to agree to changing it. Feel very vulnerable as I'm not familiar so think I will just get my own solicitor then it's may help avoid any problems. Any ideas what it would cost ??


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