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Writing a will - I've got a few questions(5 Posts)
DH and I are having our wills written at the moment and I have a few questions.
- Our home, which has life assuarance linked to it, is about the value of our combined IHT and we have some savings so the total estate would be over the £650k limit. Do we need to have a fancy trust to protect the rest of it. Is this usual? Are we being suckers for not sorting one out or is it just people with lots of money that consider this. DH is concerned that creating a trust will just mean more expense in the short term.
- we are appointing my parents as guardians and trustees. Do we need a check and balance person? We had considered DH's sister as trustee but she doesn't show much interest and I fear her failure to get off her bum might lead to much frustration for my parents. Should we appoint her, an unrelated third party or no one. My parents are pretty thrifty with money but somewhat obsessed with it.
- if my parents used our cash to buy a bigger house (which they would need to do to house the children) would the house belong to the children?
If there are any experts out there that would be great. The solicitor we are using seems very difficult to pin down - thinking of suggesting we go elsewhere.
It depends on how your life assurance is set up. If it pays out to your estate, then your estate will be over the £650k. But if your life assurance pays out to a trust/nominated person then it will not be part of your estate and you could come under the £650k (depending on the size of your mortgage).
It depends how high over the limit you go and what sort of trust is being proposed. Running a trust is expensive with complicated tax arrangements (eg all income is taxed at 50%, there is a necessity to have documented trustee meetings etc.) so it's not always worthwhile if you are "just" over the limits. You do need a will, even if you don't have a fancy trust!
It's up to you and your DH as to whether you involve a third trustee. I would always recommend it but you know your family better than I do.
If your parents are the trustees and bought a bigger house, they would own as trustees for your children. If we are being strict about this, technically they should pay rent to the trust, as they would be "benefitting" from the trust as well as the children. They would also have to sell it and realise the assets when your children became adults and entitled to the capital. This can work fine but I would really recommend a third party to be a trustee in these circs as turfing out your ageing granny and grandpa from their long established home might be quite traumatic for someone in their early twenties. Alternatively, they could put the money from their existing property into the house as well (assuming they own their own property) which a) keeps them on the property ladder and b) means they wouldn't have to pay rent. They would then own part of the house for themselves and part on trust.
I am a solicitor doing wills and probate. Let me know if you have any other questions.
I agree with Ladyflip (am also a lawyer specialising in Wills), and in your circumstances I'd say you definitely need at least one additional Trustee.
Thank you both.
I am going to check the life assurance policies. I imagine mine are payable to Dh and vice versa - positive that children are not mentioned. DH's work life assurance is c. £500k!
Re: the 3rd trustee - could we ask a solicitor to take on this role? Would it add a lot of cost to proceedings? I know my SIL would be very tardy in cooperating and this would drive my parents mad. However, I would say that they are pretty canny with money and I don't trust them to not pocket some of my children's money because they felt they had earned it - which to be they will have done.
In that case then it would probably be worth appointing a firm of solicitors to act (not a specific solicitor, as they're likely to move on during your lifetime). The costs of administering the trust would be quite considerable but if there really is no other suitable family member you may not have a choice.
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