Have I understood will/trust arrangements correctly?

[Crabsy]

Disclaimer to start off - this sounds like I'm counting down the days until my DM and MIL pass away. This is absolutely not the case, and I don't want to come across as greedy or entitled. But I am having to do some serious financial planning (because of a medical condition which means I can't get life insurance) so I want to ensure I have understood correctly and don't want to press DM or DMIL on the details too much in case it sounds like I'm just after their money!

My DF died a few years ago and at that point my DM sold the house and downsized. The house sold for £200k and apparently their wills were set up so that my DF's half (£100k) went into a trust so that it is protected and can't be eaten up by care costs if my mum needs to go into a care home etc. Each of his DC have 1/4 of his share so as things currently stand, that is £25k each. My DM has bought another (smaller) home for approx. £150k and kept the £50k difference to supplement her pension, so I think the original £100k of my Dad's half is still in the trust as the leftover £50k cash would have to have been taken from my DM's half. Would that be correct? If so, unless there's a big housing crash (in which case a lot of us will be buggered), can I fairly safely assume that at some point in the future I can expect a minimum inheritance from my DF of £25k? And if say in 10 years' time my DM's house is sold and has increased in value from £150k to £180k, do the relative proportions stay the same and therefore my DF's trust would increase in value by £20k and my DM's half by £10k, or does that whole extra £30k of profit go into my DM's share? (Of course I may at some point also inherit some of my DM's share but she may well need a care home so I'm not assuming anything for now).

Meanwhile my DFIL has also passed away and him and DMIL also had a similar set up with trusts, but my DH only has one DB. DMIL is also about to sell and downsize to free up more cash to supplement her pension. So do the same principles apply here (albeit with the sums involved quite a lot larger) - DMIL's house currently on the market at £530k, so if we assume it sells for £520k, DFIL's half in trust would be £260k of which we would inherit half, so £130k.

Basically I'm trying to work out the extent to which this money is 'guaranteed' to us - even if its in 10 or 20 years' time - because I'm worrying about having a big mortgage, two young DC and not being able to get life insurance. It would be a huge relief to know that at some point in the future, we will definitely get a minimum total inheritance of £x amount. If so, I am then going to try to work out how to write my will to ensure that if I died before my DM, my DC would still be entitled to the inheritance from my DF's trust.

Well done if you got this far and thanks for any advice.

I don’t know much about trusts. It is my understanding that they can be set up in a variety of different ways so without knowing all the details it will be impossible to know what your potential share is likely to be.

My PIL have a trust and on death FILs half of the house did go into the trust. However MIL is one of the trustees. If she needs/wants the money it is hers first. I also know that not all the children are trustees. They are all in the will but the house is not included in that.

If you take my advice I would put all thoughts of possible future inheritance out of your mind. Easier said than done I know.

When DH and I got together PIL’s were perceived (by others) as being wealthy. Certain family members have rested on their laurels or made financial decisions thinking one day they will get an inheritance. There is very little money left now. Some of the people expecting to benefit aren’t even in the will.

The only way to know for certain what your future financial situation will be is to secure it for yourself. I am sorry that your health concerns make this difficult. Please don’t think that I am being glib but I would never rely on getting anything from anybody. That way if I do ever inherit in the future it will be a bonus.

You need to look at the trust deeds to find out what the situation is.
Was it £100k or was it 50% of the equity?

Who are the trustees and can they be trusted…?
Plenty of trustees mismanage trusts.

Nothing is guaranteed, ever. I had an aunt who in her 70s met a new fellow (they did not marry) and he got all her property when she passed.

Funny how when it’s inheritance from your side of the family it’s I will get, when it’s the husbands it’s we will get. You do sound grabby tbh, without seeing the legal document, knowing the trustees and any clauses no one here can tell you, personally I live by, never count your chickens until the eggs have hatched.

@Nothighgaprequired how is it grabby to want to know if my kids and DH will be inheriting money if I die? I have no other means of providing anything for them as I can’t get life insurance at all. If we were talking potentially £5-10k then it’s not much in the grand scheme of a mortgage of nearly £300k but it could potentially be a lot more. I don’t care about the money for myself, I’m not interested, we are fine as we are at the moment. I’m worried about what will happen to my DH and kids if I die from this condition and they have no life insurance payout.

@RandomPerson42 thank you for the advice. So the trustees for my Df are me, two of my siblings and my DM. Me and one of my other siblings have POA for my DM. I don’t know who the trustees are for DFIL however I don’t think it has actually been set up yet as the house sale has not gone through. I imagine it will be DH, DBIL and DMIL. DH also has POA for his DM.

Even if you do inherit from DPs estate, there's absolutely no guarantee that there will be any money for them to inherit from you. If you live a long time you might need the money to pay for care, and if you hold it in savings then it may affect your entitlement to benefits or pension credit.

My DParents had similar. From what understand the trust amount is sitting in the value of the house and the excess when down sizing is the proportion of the person who still lives. Therefore the "pension" is DM money and the trust amount will come from the house sale. I'm not sure but I think the trust amount is ring fenced when the death of your father occurred and the will/trust was sorted. Therefore I believe even if the house is valued at £1 million your trust amount is still only £100k.

This is how i understand it anyway.

I think you may need to look at the details. In my experience legal advice on trusts can be very expensive and there may also be Capital Gains Tax implications or changes to tax. In addition, you have to factor in increased cost of living and perhaps live in carers or the cost of care homes. A relative is currently paying 27.00 ph for care visits, that soon swallows up a lot of money. As I said to my relative, enjoy your money, we will appreciate anything we inherit but our pension plan is not your house!

Thank you @LadyLapsang but I thought the whole point of the trust is that it is protected money? So it doesn’t count as one of my DMs assets and once her half of the house sale has been spent on care, she would be eligible for social care?