Out of trust?

[Tofros]

There is a potential way forward which also avoids the IHT issues inherent in your brother having an IPDI in the property. You could agree between you to formally vary the will by deed .so that the property is left to him solely but subject to a formal, registered legal lien charge equal to half its value in your favour. The lien can be index linked to cpi, rpi or I think to property inflation if properly defined. His equity in the property will be limited by the charge, and if he decides to sell you will get your portion. The variation has to be completed within 2 years of death to be effective for IHT and CGT.

[Nic232]

Turns out that was another dead end idea - I can't step down as trustee and appoint a professional without his agreement from what I understand - and trying to force that would nned court action???

What if Ijust aska solicitor to help me navigate any potential diffuculties should I face them as trustee ie him not pay bill / refuse sale?

Am I not just turning in circles - he is co-trustee - so he has the power to not sign anything he doesn't like

[Tofros]

Turns out that was another dead end idea - I can't step down as trustee and appoint a professional without his agreement from what I understand - and trying to force that would nned court action???

What if Ijust aska solicitor to help me navigate any potential diffuculties should I face them as trustee ie him not pay bill / refuse sale?

Am I not just turning in circles - he is co-trustee - so he has the power to not sign anything he doesn't like

Yes, that sounds true. Might be worth checking out whether he’d agree to the alternative option though as it gets you both out of being trustees and he would be left alone to get on with things subject to the charge in your favour. Also IHT advantages.

[Nic232]

HI
Newbie here! Happy to have found you.
I'm 52, Brit, l live in France.
Back in UK - Dad died ..9/25 and left house - in trust giving my brother the right to reside in the property - ok with me, he's never moved out

I'm freaked however at idea of being the trustee as it seems pretty complex for my weary old head.

Brother and I are trying to see if we can by our mutual agreement transfer the set up to a less complex structutre - I was told by a solicitor today that we'd need seperate legal advice - so I'm going to try to move forward that way - any advice for me would be welcome!!
Nicky

Yes that's it. It's an a trust with me and him as trustess and beneficiaries, with his right to reside. Correct me if I'm wrong - doesn't his position as co-trustee protect him from any eventual catastrophic, worst case scenarios where I try to prove he someday breaks the trust rules ( far from the cqse today but life changes right and he may run out of miney, he may lose capacity etc ) - as I'd need his signature to make any sale - wouldn't I just be stuck as he has the right to refuse t isign abd is ci trustee? It seems I have been put in the most ludicrous legal role with bleow zero power and actual risk of having to pay out if things go wrong - there's not a dime available in the fund - it's all in the unsold house - any legal battle I may have with him would have to come out of my pocket as no professional will put it on the tab til the house is sold.

I have discovered a previously unexperienced dull ache in my forehead which worses at each wall I seem to hit in my ( poor ) understanding of this mess.

If you are able to hep me i would really appreciate it!!

[Nic232]

This is the mail I've done t send to a solicitor - would this help me get the answers I need - can you think of any more questions I could ask - and do you have advice?



I’m comfortable with the current arrangement and understand that Mark may remain in the property for some time. I’m happy to wait for my share on a future sale.

However, I’m concerned about my role as trustee, which I don’t feel I knowingly took on at the time of probate, and the potential exposure this may carry , complicated by the fact I live in France


In particular, I’d like to understand what happens if brother:

• stops paying outgoings
• loses mental capacity
• refuses to cooperate with decisions (e.g. a future sale)
• or needs to move into care

Given that two signatures are required to sell, I’m unclear how matters proceed if he is unable or unwilling to act.


I’m also aware he would not be comfortable with a professional trustee, which may complicate things if I need to step back.

Could you please advise on:


my potential financial/legal exposure as trustee

• how these situations are typically resolved - and so how I could resolve issues
• whether a will or Lasting Power of Attorney would reduce risk
• what my options are if these are not in place
• whether I could instruct a solicitor to act on my behalf without appointing a professional trustee
• likely costs in more serious scenarios
• and whether there is a simpler alternative structure, and any tax implications of changing it

I would also lke to know the timing for - registering trust - updating conveyancing - and any eventual change tio will - dad passed 16.9.25.



I would find it reassuring to understand where I stand and what my options would be if things became more complex, and what workable options open to us to change out of the trust and consequences of such.

The solicitor has quoted £750+vat for a letter of advice for trust, trustee and alternative advice - I would also like to be able to talk with him too as I find it very hard to understand ecerything and it helps to talk - is that extra to the letter of advice?

Thanks!!

[Tofros]

I assume you will provide copy of the will and it would be helpful to provide a copy of the property title registration too if you have it.

Don’t say you are comfortable with the current arrangement, just start with I understand…

Add to the questions , are my interests currently protected by an appropriate restriction on title? And will I/ my estate be able to recover anything I pay towards meeting his liabilities from his share of the eventual proceeds of sale. What records would I need to keep for this purpose?

Specify that it is your brother making a will and LPA if that is what you mean.

I would be inclined to specifically suggest ending the trust -conveying the house to brother as sole legal owner subject to a charge in your favour as a possible solution either via a variation to the will or appointment out of the trust ask if there are any other ways to terminate the trust but maintain your financial interest in the property in a cost effective way.

[Nic232]

Thank you sincerely for your advice - I've added your questions into my mail - I'll read over it and send it during the week - do I ask for a letter of advice? would a meeeting with him be better?

I'd like nothing more than to end the trust - my brother doesn't want it either- he feels very strongly that he doesn't want to feel 'kept' by me and even less an outside pro trustee teh sutuation need it.

Is there a way to do this? "conveying the house to brother as sole legal owner subject to a charge in your favour as a possible solution either via a variation to the will or appointment out of the trust"

Do you think it could work in my case?

It is exactly what I'd like - step totally out of the trust, allow him to live there however that plays out - take my half one day if ever he sells it

I'd be entirely happy with conveying the house to him - and having the 50% charge in my favour as stipulated in the will.

That would mean I'd be out of any liability risk of personal liability in worse case / catastrophic outcomes ?

It's precisely what I want to have - a way out of the trust that keeps his right to live there, protects my half, and frees my completely from any responsibility - the opposite to the role of trustee that I never knowingly agreed to taking in

[Tofros]

It may depend. Factors may be where you are in the period of administration of the estate - in which capacity are you registered on the title -as executors or as trustees?. What have you done, if anything, to constitute the trust? You may be able to do a deed of variation of the will regardless. On the other hand it may depend on what the STEP provisions say you can do as trustees.

It is usual for executors to sign something formally moving a property out of an estate and into a trust, even if the executors and trustees are the same persons. Remind yourself of all the steps you have taken as executors and perhaps list that as a note for the lawyer.

[Nic232]

Thank you.

As yet - we have probate, and I was in the process of registering the trust when we stalled, wondering if we're sure about the trust - we've not yet signed anything formally as far as I know - we've only done probate. We've not transferred the conveyancing.

I think we are both named as executers.

I have uploaded the will in the chat previously if that helps you see.

Does it matter dad died over 6 months ago - 16.9.25?

We do both agree we want out of the trust - that must simplify things?

I was thinking of holding off with my barrage of trustee questions for the solicitor for now, and ask this, focussing on finding out if there is a way ending the trust -


here's my email draft...


"Given the complexity of the trust, asd I mentioned , my brother and I would both much prefer restructure the trust and replace it with a simpler structure , that mirrors the wishes of our father's will-trust - and as such this is the focus of the advice we need from you.


What are the options to ending the trust - me conveying the house to my brother as sole legal owner subject to a charge in my favour - via a variation to the will or appointment out of the trust?


How could we organise such a change, and how also would we manage any tax consequences?


Are any other ways to terminate the trust but maintain my brother's right to redside, and my financial interest in the property in a cost effective way?

The point we are at is - probate has been granted, the trust has not yet been registered, and we have not done conveyancing

We're open to your suggestions on how you can advise us on these questions"

Is that okay do you think? Can you think of anything else I should mention?


Thanks so very much for your help.

[Tofros]

It would simplify things so that sounds like a plan. You have two years after death to do a deed of variation of the will such that the new arrangements are treated as if they were always what the will said for legal, IHT and CGT purposes. In that way the trust will never come into existence.

I would say “avoid having a trust,”rather than restructure, and say “has the same practical effect as the will trust” rather than mirrors our fathers will trust.

you should make sure you get clarity on the tax consequences of alternative arrangements. For example, if you were to index link the charge so that the debt to you increases over time with inflation, there might be CGT to pay on the increase in value of your charge when the house is eventually sold. However, if instead you were part owner when the house was sold you would still have had to think about CGT because you do not live there. Your brother, on the other hand should get a principal residence exemption. Whatever inflation mechanism you choose, I presume your aim would be to end up with an amount as near as possible to half the value of the house when sold. It may not be possible to find a mechanism which does that precisely but you might be able to define something reasonably close (like the average increase in house values in the same postcode - I think Nationwide may publish those figures)

it would not be you as such, but the executors jointly who would do the conveying on the terms of the “new” will. If you were to vary the will so you both owned the house jointly beneficially and then afterwards get your half transferred to your brother in return for the charge I think he might have to pay stamp duty on that transaction. Doing the gift of the property to him in the will variation and the gift to you of a debt secured on the house through the will variation I think would not involve any stamp duty.

If your brother were to pass away and you inherit his title, its value for IHT would be its market value less the debt owed on it. Under the current will terms, the whole value of the house would be counted inhis estate for IHT I think.

[Nic232]

Thank you so very much for your reply.

I will send the email and let you know what they say.

[Nic232]

I wrotte to one solicitor who replied this:


"From what you have described, it seems that the Will Trust achieves what you want it to.

I am not qualified to advise on any other ways to hold the property with the same effect.

You are entitled to seek a second opinion from a different law firm"



The point that we actually want to be away from the complex trust structure seems tp be missed - that we want to vary the legal structure
I do niot want to be a trustee , I was never asked, I live in France, and I don't want the liability.
My brother doesn't want it as he knows one day he may have to pay ( alot ) for a professional trustee, and he alsi just wants a more simple structure.
Maybe I should have been more clear that the aim is to be end the trust? Should I word the email differently?
Should I specify we want a deed of variation?

[Nic232]

Another solicitor has offered this :

"I’d be happy to undertake a full review and provide you with a letter of advice outlining the implications of the trust contained in your father’s will, and your options as to how you can deal with the trust assets and/or bring the trust to an end (along with any relevant tax implications which ought to be considered).

My fee to conduct this initial review and advice would be £750 plus VAT, and we would require payment on account of our costs up front before proceeding with the work."


But today my hope and focus is to find a way to get out of the trust, so I don't want trustee advice today.

How could I word the email to ask his advice just for ending the trust - and how can I be sure I won't end up paying alot - to be told it can't be done?
I'm honestly not that bothered to pay big for advice - so long as I can use it

I'm discovereing on the internet there's such a thing as a deed of variation solicitor - should I contact one of them?

[atticus]

What that solicitor is offering seems sensible. I think that you need the full picture to be looked at, so as to ensure that you get the best advice. As the solicitor says, there can be tax implications to winding up a trust early.

[atticus]

How could I word the email to ask his advice just for ending the trust - and how can I be sure I won't end up paying alot - to be told it can't be done?

if you must do this -

"I want to end the trust. Please advise how best to do this"

That wasn't difficult, was it?