House left in trust

[EddieSweety]

i need some help with getting my head around properties left in trust.

widowed parent wants to leave their (grown adult) child their property in their will, in a trust. The parent has three children, but only wants this one child to have the property.

I have a couple of questions and would greatly appreciate any advice -

after the parent dies, does this mean that the child is then the full owner of the property?

can the child then chose to sell the property, if so do they have to share the money from the sale with the other siblings?

when the child eventually dies, do their subsequent children inherit the property?

thanks

Why does the parent want to leave it in trust rather than leave it directly?

I'm.not a lawyer but I would say that, unless there is a VERY good reason for leaving the house to only one child, the parent needs to rethink this if s/he wants their children to have any sort of relationship after their death

I suppose one reason for a trust might be to prevent the inheriting child from selling and sharing the proceeds with the others? But they could think it's more tax efficient or something else www.belvoir.co.uk/nottingham-central-estate-agents/articles/putting-a-house-in-a-trust-is-it-worth-it/

So the child that inherits the trust house, if they sell it, they won’t have to share the money with siblings?

it’s all so confusing and I can’t get my head round it

Depends how the trust is drawn up. When the house is sold, the cash still belongs to the trust. How the money is used depends on the powers of the trust deed and who the beneficiaries are.

For example, the trustee could use the money to buy another house. They could invest it. They could also distribute it out to the beneficiaries.

Perhaps the trust is set up such that the child can live in it for their lifetime, but if sold, the proceeds can be distributed between all children.

Without reading the terms of the trust, no one can tell you with any certainty what can and cannot happen.

The trust corld control how the asset could be disposed of, and whether it could be sold at all I guess? I think the answers to the questions in your original post will depend on the terms of the trust.

Are you sure it's not just that one child is the trustee and the others are beneficiaries?

So this would mean when the house is sold by the trustee, if the other siblings are beneficiaries they would get a share of the sale money?

If the house is left in trust for the one child to live in then they don't own it the trust does. Is it a life interest trust? It should state conditions for the trust to end and then how are residual funds are dispersed

As has already been said, unless you post the actual terms of the trust we cannot give you a definitive answer. For example, my DMs share of her house was in a trust whereby her DH could live in it until he died or remarried. At that point, the house reverted to her children.
If the reason for the trust is so that one child can live in the property until they die, then at that point the house would be distributed under the terms of the parent’s will.

My understanding is that if the house is in trust then the person named on the trust owns the house and can sell it. Any monies from this sale belong to that trustee.
They do not have to share with the beneficiaries of the will.

Yes I agree.

If they just want one child to benefit and keep house forever then no point having a trust (unless under 18 or is incapacitated)

If it's so they can live in for life then split 3 ways that makes more sense (particularly if grown child is incapacitated or has lived at home all their live and other kids have own home) -may not be fair but makes more sense.

terms haven’t been decided yet - it’s only the start of the process just now. I just wondered if there’s a way if the house if sold, that that one child then keeps all the money from the house, without it being shared.

The question is why she wants to set up a trust. If she wants the house to go to this child, she can simply leave it to them. No need for a trust.

Is it that she wants to leave a life interest to this child with the property passing to someone else when they die (e.g. being shared with the other children when they die)? Or do they want to make sure the child acts responsibly and doesn't waste their inheritance? Without knowing the terms of the trust, no-one can answer your questions.

However, if the goal is to make sure that the money is ultimately shared with the child's siblings, there is no way round this. The child may be able to sell the property and use the money to buy another property, but they will not be able to spend the money in other ways.

The wording of the trust is crucial, some trusts cannot dispose of property. The second part of the question is dependent on the first.

I would say it could be that the parent is trying to avoid inheritance tax or more cynically an advisor is encouraging a trust as they will make money from it. You need more details.

It really depends on the terms of the Trust. A friends grandmother left a property in trust to her daughter but the terms were she had benefit in her lifetime but the Trust broke on her death leaving it to her 7 children.

Her Mother couldn't sell it but the children could.

So you need to check out the Trust.

If for e.g. that child was "vulnerable" in some way e.g. ASD and it was to ensure they always had a home, but their affairs were dealtwith by a guardian - the guardian could potentially dispose of the house or transfer it to a smaller property if it was in the best interests etc - releasing funds to the individual child - if the Trust doesn't say so then NO they dont have to share with other siblings.

Is the trust set up so the inheriting child doesn't get pressured into selling and giving money to siblings?

Nobody can answer your questions because the terms of the trust haven’t been decided.

Is it because the inheriting child can’t hold property because they are under 18? wills can create a trust when parent dies on such terms.

If person wishes to leave just 1 adult child their house then make sure the will is correctly written any other children could make a claim. It doesn’t sound like a trust is necessary but if a will hasn’t been wrote via a solicitor it might be an idea to ask them to use their services. I hope a trust wasn’t sold to her as part of a package from a will writing company these companies are often unregulated and can major problems for families of deceased due to badly written wills.

Our will was written by a specialist solicitor and we left the house to both DC with the proviso that our single DD can live in it for as long as she wishes.

Why? Is that not unfair on your other child? They could end up with a hefty CHT bill by the time they receive their share whilst their sibling has had the financial benefit of not having to pay rent or a mortgage for what could be years!

OP are you in Scotland / England & Wales?