Declaration of Trust

[AH717]

Need some advice. We will be going to a solicitor next week, but the worry is driving me mad.

A long time ago, to help a parent get through a divorce and retire, we purchased their house at market value.

We wanted to protect them, so we had a declaration of trust drawn up, that If we sold the property, they would get 50% of the profits.

Thats been perfectly acceptable, until now.

They moved out when they wanted to live in sheltered accommodation, (they are 80), and started talking about estate planning.

Imagine my shock, when they said they wanted to leave their share of the property to some complete stranger.

The advice when we set this up, was that this was just an agreement between us, it’s not part of their estate, and couldn’t be passed on.

Now I’m worried, I have just put my own pension into a huge amount of renovation work, and am sick to my stomach with worry

The statement in the deed are:

1. The Legal Owners declare that they hold the property in trust for themselves and

the Beneficiary in fee simple

1. The Legal Owners and the Beneficiary hereby declare that the proceeds of sale

(after deducting thereout the cost of sale) shall be held by them upon trust and the Beneficiary shall be entitled to one half of the value of the net proceeds of sale absolutely and the balance shall be paid to the Legal Owners

is there anyone out there that can stop the worry, and confirm that this kind of agreement would not be part of an estate?

and if it is, do we have any recourse to challenge/amend as it’s not what we paid the solicitor to do.

Geet another solicitor to give you advice.

Let me guess you were told to set this up to put the house into trust so that it wouldn’t form part of their estate but you seem to be confusing two things. Their share of the property is in trust as they are the beneficiary. You cannot stop them from leaving their share to whoever they want. Frankly it’s a poor agreement for them when you bought their house did money exchange hands? We’re you hoping that you would never sell and when they died their share pass to you. Good luck with the solicitor.

Did you pay 100% of the value or 50%?

Did you pay 100% of the renovations?

IANAL but it reads like the parent gets 50% of the property to do with what they want. Try asking the solicitor if either 50% or 100% of the cost of renovations could retrospectively be turned into a private mortgage (with or without interest) from you to your parent and a charge registered against the property. This way the cost or renovations is repaid before you work out the net value.

50% of any profit or 50% of the proceeds? Is it mortgaged or did you pay cash? How do they plan to fund the sheltered housing, is it rental or owned?