Putting a house in trust

[LezUlez]

Hi, this is my first thread so I apologise in advance if someone has posted about this elsewhere, I didn't see anything.

My DH and I are making our first will. We are both in our 60s. The solicitor is keen that we put the house in trust. He says that this will protect kids and help us avoid care home fees. I am bothered though, that the house wouldn't legally be ours anymore but belong to the trust. I feel that legislation could change the care home thing in future anyway so that the model is different.

Has anyone gone down this route and found pitfalls? Or is it something to be recommended? I know that if I'm the survivor I would certainly not remarry. I think it's unlikely for my DH as well but no one can be sure I guess.

Thanks for your comments, and btw I'm not saying that I am determined to dodge care home fees, but this has been suggested by the solicitor.

https://www.gov.uk/trusts-taxes/registering-a-trust

if it’s held for more than two year in a trust your supposed to register it with HMRC
you
You do not need to register your trust if it:

• is a will trust created by a person’s will and comes into effect when they die (as long as they only hold the estate assets for up to 2 years after the person’s death)

we had to do it for my dad he died just over two years after my mum died

had he died a few months earlier we wouldn’t have had to register it as the trust can hold the assets for 2 years before having to be registered

our accountant dealt with it for us and filled out the form as it was huge 😂

This is what I have done with a trust.

After reading several horror stories on here re inheritance and second marriages, we used the trust route to ensure that our children inherited from at least one parent in the event of either of us forming relationships after the death of the first spouse. They are the trustees of the trust I think and can dissolve it if they wish after our deaths.

Mumblechum was the lovely person who did my late parents wills 😂
which is why it’s all still quite fresh in my head
I would highly recommend her as someone to do this for you

my parents were complete technophobes but she made the whole process incredibly easy for them both and for me as the executor

We’ve just written our will, similar age as OP, we’ve put our house in a trust and our 2 daughters are the trustees. Our understanding is that if for example, my DH dies and I need to go into care then his half of the house is kept in the trust for our daughters to benefit and cannot be used to pay for my care home fees and vice versa. We did our wills through free wills month which is in October and March and paid an extra £400 for the trust. I’ve spoke to a friend who has also done the same. We’re happy with our decision.

We used free wills month too. The complication in our case is that we intend to downsize but not sure when. If the house move happens after one of us has died, it is not clear if half the equity has to go into the trust rather than being available for the remaining spouse to use.

If there is no intention to move it seems more like a straightforward good idea.

This is what my late parents did. It worked well and there was no problem with the execution of the wills.

We did have to register with HMRC but were told we only had to do a return if the trust had an income. Which it currently doesn't because its a home.

Sorry that I'm so late to reply.

As @Frostiesflakes said last night, if the trust lasts for more than two years then yes it does need to be registered.

It's quite a straightforward thing to do.

"...it is not clear if half the equity has to go into the trust rather than being available for the remaining spouse to use."

It all depends on how the will was written. If the solicitor did their job properly then the will should be written to allow the trustees to use the trust to purchase a new property along with the surviving spouse.

Here is an example from a will:

The Property Trustees may at any time during the Trust Period as to the whole or any part of the Trust Fund in which the Life Tenant has for the time being an interest in possession pay out any proceeds of sale of this property or any substituted property (purchased as a result of this clause) to purchase a freehold or leasehold property which will be held for the benefit of the Life Tenant on the same trusts to which this clause refers.

So, if there is a clause like this in your will then the Trustees can choose to use some or all of the deceased spouse's share of the property to buy a new place for the surviving spouse and the Trust will still own whatever the relevant percentage of that new home is.

If the surviving spouse is downsizing then there will likely be money left over.

The beneficiaries don't get to keep that money. It needs to be still held within the trust and be invested until the surviving spouse dies.

Thank you so much for your in depth response.

The person who wrote the will for us didn't show us a copy of it before asking for payment (£700) so we were expected to pay for it without even being able to see the exact wording. We had reservations anyway and this felt wrong so we said we just wanted the basic mirror will we originally requested which was free under free wills month.

To be fair to her she has now sent us a basic mirror wills to sign at no cost, which we will do.

Maybe I'm a bit of a control freak but it just feels "off" to me that if I am the remaining spouse, I would have to ask permission from the other trustees to do certain things. I would rather retain control (even though the trustees would only be our adult children) and my husband feels the same.

I do understand the benefits of this type of will (though the remaining spouse remarrying is not something that either of us believe would be an issue so for us, it would be done more to protect half the house from potential care home fees).

Thank you again. I can see they are a good idea for lots of people. I just think they should be very carefully explained. Which ours wasn't at all but maybe that's partly our fault for trying to get a free will rather than booking an appointment with a solicitor and and getting a better service. I don't think our will writer was a solicitor, she was from Octopus Legacy and didn't say she was a solicitor.

i think the money left over if you were to downsize has to be invested so no the beneficiaries can’t touch it but neither can you as it’s not your money any more

there is also the case of if either of your children claim any benefits like universal credit / housing benefit then they may not be able to get any benefits as they are the legal owner and beneficial owner of the trust

it could also affect and First time buyers benefit as they are again the legal and beneficial owners of the trust / house

it they were just the legal owners not beneficial owners of the trust then it wouldn’t be a problem as they only legally hold the house for the trust and they will not be beneficiaries of the will/ trust

so trusts can sometimes cause a problem 😂
in the future

Lifetime trusts are a scam and are clearly deprivation of assets.

Life interest trust wills are fine. They are not avoiding care fees they mean that you each pay for your own care but may save the whole estate being used for the survivors care. The survivors half is still used for their care but the first to dies half is owned by the trust though the survivor can choose to use it for their care if they want. They only apply when one has died.

Children don’t get anything until second death. Survivor uses and enjoys whole estate while they are alive.

That's the bit that bothers me Frosties it’s not your money any more

You need a proper solicitor to take you through the pros and cons of all to survivor or trust wills. It entirely depends on circumstances. And avoid these “free will”
scams nothing is actually free.

Very true.

We'll just sign the basic mirror wills for now as better than nothing (got no will in place at the moment) and will revisit with a proper solicitor if we wish to explore the other option in more depth in future.

PIL did this. MIL went into care when FIL died, her half of the property has been invested, solicitors have said it can’t be touched for care, and DH and SIL have each shared FIL half. No capital gains tax. MIL has enough in other savings to last about ten years (unlikely) so we’ll see what happens.

I inow a little bit about this subject. Can't say how or why.

But your Solicitor may suggest something called a Tenants In Common Trust. Where you, your husband and children take equal shares in the house. Then when soneone dies their share of the house is split between the lliving survivors.

Not paying Car Home fees or putting paying them off has become a real racket and National Sport.

But it is quite legit. Blatsnt use of getting round Deprivation if Assets re leeching iff Social Serivices funds and care home fees by the well off .

I would personally like to see this changed big time.

Hope a goverment does this real soon

Sorry, not read all posts, but I understood that if a house technically belongs to your children you would need to pay rent to them or it isn't considered that you've actually given the ownership up?

You’re talking about something different

We have our house in trust, but this is to protect the house for our currently teenage, children as I have a life limiting illness and have read too many stories and known too many people who have had problems with houses/wills etc when step parents/second families come into the mix. What my DH does with his half, care home wise or whatever will be down to him. But for us, putting my share of the house in trust has been the best option.

I have intimate knowledge of a wide range of funded and private local care homes. Nothing would induce me to give away the chance of paying for a nice comfortable well staffed home and instead taking pot luck with council funding. I love my kids, but not that much.

My dad was advised by his solicitor (who said an option was a trust) that it is not 100% guaranteed as the local authority will go to court and fight it. Also the laws around it could very well change.

When my Mum and sdad made their wills some years ago my Mum raised this as she had read something about it and her Solicitor said it was a bad idea in no uncertain terms and was very scathing about other Solicitors who suggest this

This is a concern too.

We love our kids also but have already gifted them big deposits to help them get onto the housing ladder (from an inheritance).

Think maybe I would rather have the security of knowing all proceeds from the eventual house sale would be available to use for any reason for the remaining spouse rather than half being tied up in a trust for the kids.