House in trust, now what?

[Lidlisthebusiness]

I'm not sure if this is the right place to ask, so please let me know.

My parents owned a house, and for the last few years of living there put it in trust with me and my 2 siblings. They then decided they wanted to move, so we all signed the paperwork to allow the sale of the house. They downsized and bought something else but no further paperwork was signed by us for the new property.

I'm now at a point of needing a care home for Mum, and probably Dad in the not too distant future. They have savings, and I'm aware the financial assessment will be done soon, but it has just occurred to me that I'm not sure where everyone stands with the money from the original house. Was the equity actually that of the 3 siblings, and so did we actually buy the new house, even though our names aren't on it? Where does it leave us and our parents when it comes to this assessment?

I will be speaking with the social worker who is helping, but until then I was hoping someone could offer some advice.

I would have thought the trustees would own the new house - but it depends on the deeds? Is it just in your mum and dads name?

The cash from the old house will belong to the trustees unless it’s been appointed out. The trustees can appoint the cash to the capital beneficiaries - but there can be tax implications so you’d need to check.

Do you know who the trustees are?

Who does the land registry say owns it?. Easy to check.

If they downsized what happened to the cash difference between old and new house - is this still in the trust? Or did your parents pocket this cash? Or indeed did one of your siblings?

Think you need to see what your parents and siblings recollect and go through relevant paperwork.

Are your parents making their own decisions or do you or someone else have power of attorney. Do you and your siblings want the money from the sale of the house or do you want your parents to be able to use it?
I don't know how the situation would be looked at by the Council from a 'deprecation of assets' point of view.

There are a number of different issues here

"I'm now at a point of needing a care home for Mum, and probably Dad in the not too distant future. They have savings, and I'm aware the financial assessment will be done soon"

Presuming that your dad is over 60 and remains living in their home then, when the council do the financial assessment, they will disregard the value of the house when it comes to calculating your mum's capital.

So, unless, your mum has very large savings then it is unlikely that your mum will have to pay much or anything as long as your dad remains in their home.

The amount of capital taken into account varies between England, Wales and Scotland but, in England, it is £23,250 and higher elsewhere.

If your dad goes into a care home then the total value of the home will then be taken into account for both parents.
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"My parents owned a house, and for the last few years of living there put it in trust with me and my 2 siblings."

When it comes to protecting against care home fees this doesn't necessarily work. Depending on your circumstances and the attitude of the council they may decide that your parents had deliberately deprived themselves of an asset.

An important question about this is, were they then paying a market rent on the house to the trust or were they living in the house rent free?
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"Was the equity actually that of the 3 siblings, and so did we actually buy the new house, even though our names aren't on it?"

The equity belongs to the Trust and it is the responsibility of the trustees to manage the trust for the benefit of the named beneficiaries.

It is certainly possible for the terms of a trust to be written so that property can be sold and another property purchased using the trust funds.

If there was money left over from the sale of the old house and purchase of the new one then that money also belongs to the trust and should be managed for the benefit of the named beneficiaries - it does not belong to your parents.

However, because, of the way things have been done, the council may well decide that this was a deliberate "deprivation of capital" and count the money as still belonging to your parents.

I would really recommend that you speak to a solicitor experienced in this area. There are solicitors that are registered with the Society of Trust and Estate Practitioners (STEP) who specialise in these sorts of things.

If you google something like "STEP solicitor [name of your town]" then that should provide a list of local firms that have STEP registered solicitors.

Trusts are complex beasts and not something to be undertaken lightly! If you signed the sale paperwork it sounds like you are the trustees. You have a legal obligation to look after those trust assets- you should have been responsible for the decision making about what happened to the trust assets when the house was sold, this should have been documented at the time, and you need to know what happened to the money after that because unless it was appointed out of the trust it should be held in your name as trustees. As an aside, the trust should have been registered on HMRC’s trust registration service. I suggest you go and take legal advice and trace what happened, and rectify the position if there was no appointment out of the trust. . This should then answer the question about the care home assessment.

If as trustees you all signed to allow the first house sale then your parents downsized and bought something else but you didn’t sign anything further it sounds like the trust was dissolved. The 2nd purchase of the house is likley owned by your parents. The land registry for £3 would show the legal ownership of the 2nd house.