Money held in trust for a child in a will- advice please!

[noodlebar]

Can someone give me some advice please?

Grandmother - let's call her A.

Three daughters - B, C and D.
One daughter D died a few years ago, leaving one child E - eleven years old.

A changed her will after D died, leaving all her assets to be shared equally between B C and E.

B and C are trustees for E, who will get her share when she is 18.

A has just died, leaving a house and money.

B has just got divorced and wants to live in the house.

C has not objections to this, as long as B uses her own money for the upkeep and day to day bills of house. It is unlikely that B will ever have enough money to buy the other two out in the future, and the house will have to be sold when E is 18 to pay her share.

So, is the house valued now at the time of A's death and that price given to E when she is 18 or does she get the then current value of a third of the house when she is 18?

(If E should die before she is 18, the assets will be split between B and C only.)

Thanks very much!

Gosh. very complicated.

You need a solicitor. Draw up something formal.

If you don't get it all into a legal agreement so everyone knows where they stand and what their rights and obligations are - you may find it gets very messy.

My understanding of the situation is that B, C and E are all entitled to one third of the house. This could mean that it is sold now, and each take their share (with E's invested for her by the trustees). Alternatively, if all agree, they could use the house itself as an investment (eg. keep it and rent it out). In effect, this is what they are doing in allowing B to live there.

So, if B is living in the house, she should really be paying rent to C and E (rough guide would be to work out fair rental, then pay one third to C and one third to E, the other third she pays to herself!)

Additionally, the money and other assets that A has left should also be split three ways, with E's share invested until she is 18 (although the trustees may be able to grant E access to some of the capital before then for special purposes)

Yes, I think you need to see a solicitor as you have responsibility to your niece to manage her inheritence properly, as well as being a beneficiary yourself.

I think your sister would have to pay some sort of rent, although repairs could presumably be paid out of this. The value to go to your niece would be based on the value of the house when sold. It belongs to the three of you until that point.

Well done suzikettles - you've worked out that I'm C!

I didn't even consider that B should be paying rent, which is of course correct; it just goes to show that I will probably need to involve a solicitor.

It's probably easier that the house is sold now, and everything divided up and the money invested for E.

Thanks.

"So, is the house valued now at the time of A's death and that price given to E when she is 18 or does she get the then current value of a third of the house when she is 18?"

You would have no obvious way of knowing what the house is worth without selling it. The scope for unvaluing (by accident or design) the house for a theoretical sale would leave E in significant danger of being short-changed.

1/3 of the actual value following an actual sale is much tidier.

Disclaimer - I tend to confine my contributions to threads involving young people in danger of being defrauded. This should not be taken to mean that I suspect that such a fraud has already taken place or is being actively contemplated.

You need to get a solicitor to fadvise and formalise the arrangement. Sounds like letting the house to sister C on some kind of formal tenancy agreement is most likely the way to go but a solicitor will advise on the best way to avoid disagreement in the future.

Otherwise, what happens if sister C replaces the kitchen, or upgrades the bathroom, has the drive relaid etc and then expects a greater share of the house when it's sold on the basis that there has been betterment and she has contributed to an increase in it's value.

Or what if your circumstances unexpectedly change and the house needs to be sold earlier than anticipated because you need your share and sister C says she's not moving out and you'd said she could live there until E reaches the age of 18? How are you going to get her out?

Do you see where I'm going with this? Situations like this are family trouble waiting to happen. Spend a few quid now and keep your family relationships in good nick, its now worth taking a chance over or relying on people to 'do the right thing' they might find that surprisingly difficult when there is money involved. I'm not a lawyer by btw.

Legal, if B and C didn't want to sell the house to give E her share then a chartered surveyor could provide a valuation using comparables, these of also used for tax and matrimonial purposes. There are quite strict rules for surveyors to abide by about how this is done to avoid fraud and tax evasion.

Also, if they were not buy E wout before she was 18 as trustees, they would still have a responsibility for investing her inheritance properly for her which is potentially a lot of trouble and effort and they might not want to take this on. It might be better to leave E's share in the house, manage the property safely and buy E out when she reaches 18.

I do agree, though, that the most accurate way is for a sale to take place.

legaleagle2 I understand where you're coming from but there is no danger of my niece being defrauded - I would give her my share before that would happen. I was extremely close to sister D and E would never lose out.

(I'm C, my other sister is B btw)

The house has been maintained to a really high standard and there's nothing that needs doing, now or in the near future. I know it would be easier to sell it now but sister B is distraught at the 'family' home having to be sold when 'we' don't need the money at the moment.

Oh Lord. I'm spending all my money so my children don't have to go through this.