Putting your house in a trust

This happened to us too. We had someone come to our house to make a will. I don’t consider us to be ill informed or vulnerable, but this very nice young chap talked us round in circles. We ended up agreeing to a trust- can’t remember exactly how much it was but it was around £4000. Once he had gone we both looked at each other and realised we had made a big mistake. We had 14 days to change our minds - we did so straight away. We were made to feel that we had wasted everyone’s time and it was not a pleasant experience. We had a lucky escape.

It seems to be the latest sales gimmick. Someone came to a local Probus group here, all older retired men, to give a talk on wills and this was included. He was eager to make appointments and visit people at home to discuss this further.
We cancelled.

What is the point? If you need care, authorities can go back further than seven years, if they think you are getting rid of asset’s.

Some years ago we changed the ownership of our house to Tenants in Common, owning 50% each. Last year we were reviewing this along with making POAs of both kinds and advised the solicitor that we wished to revert back to Joint Tenants of the house. She advised against it, saying that the vast majority of home ownership nowadays was as Tenants in Common, so we left it as it was.

Was the solicitor wrong? What are the disadvantages in owning the house in this way? It would be in Trust for our DDs until the second death.

The disadvantage is that you only own half of your house, so if you are widowed and need money for care (or anything else) you have 50% less to spend. This might mean that you can’t afford what you want, or that you can finance it for half the time. Councils can be reluctant to take over payments when money arranged in this way runs out, for obvious reasons.

That’s what our solicitor told us when we made our wills, anyway.

As I understand the law I can best explain by giving examples. I am assuming the couple in my example are not married because of complexities of IHT if married.

Joint Ownership
A & B own a house worth £500,000. A dies, their half of the house automatically becomes the property of the other joint owner. Their estate is nil. no IHT. B then dies. Their estate is worth £500,000, above the IHT exemption amount so tax will be paid
Tenants in Common
House details as before. A dies, his share of the value of the house, £250,000, forms part of his estate for tax. but because it is below the level for IHT, no tax is paid. B dies,now their estate is now only half of the value of the house, £250,000, This is below the IHT level so no tax is paid.

In the second example, A's estate is usually put into a trust for the benefit of family but giving the survivor a life-tenancy of the other half of the propeerty, icluding allowing it to be sold to buy a smaller property etc.

I think the usual thing to do is set up a Discretionary trust where the family are beneficiaries and trustees and the trustees can choose to give money to beneficiaries as they wish so that if someone goes into care, the house can be sold and when the survivors share of the cash is used up in care fees they can be given money from the trust.

However I am a not a lawyer, although I have studied law, and the law on trusts has been changed recently, but this is how I understand the law of ownership and trusts to work.

The children of a friend were each left a large sum by an estranged grandparent, to be held in trust until they were 25.

It took absolutely AGES to wind that trust up, and while it was ‘winding’ the solicitors who were administering it found reasons for masses of emails, letters, phone calls - for each of which there was a nice fat charge.

TBH hearing about all that was enough to put anyone off even thinking about a trust. It struck me as an ideal licence to print money for the legal profession.

Witzend

The children of a friend were each left a large sum by an estranged grandparent, to be held in trust until they were 25.

It took absolutely AGES to wind that trust up, and while it was ‘winding’ the solicitors who were administering it found reasons for masses of emails, letters, phone calls - for each of which there was a nice fat charge.

TBH hearing about all that was enough to put anyone off even thinking about a trust. It struck me as an ideal licence to print money for the legal profession.

Absolutely. Someone has to manage that trust & it’s not free.

Read the Times today.

Don’t do it! If your other half passes away you will only own half the house - not enough in my case to buy something else. Luckily the grandchildren have all agreed to a Deed of Variation so the I take possession of the property.

LadyGaGa

This happened to us too. We had someone come to our house to make a will. I don’t consider us to be ill informed or vulnerable, but this very nice young chap talked us round in circles. We ended up agreeing to a trust- can’t remember exactly how much it was but it was around £4000. Once he had gone we both looked at each other and realised we had made a big mistake. We had 14 days to change our minds - we did so straight away. We were made to feel that we had wasted everyone’s time and it was not a pleasant experience. We had a lucky escape.

We had a similar experience but she gave us a week to decide. I did some reading and since we are both 82 we felt if one of us did need care we could be accused of deliberate deprivation of assets so we went with mirror wills, the trust would have cost us £1200.

MT62 I was involved in care costs at work. People try loads if different aporoaches, eg transfers to family whilst still living in a house, trusts, no matter what people did they could
very rarely answer Why? other than to avoid care costs.

My husband and I have mirror wills as did my parents, we are “rich” so don’t need to find ways to “cheat” the system.

It is what it is.

I know this must sound rather vague, but I remember looking into this many years ago and can’t remember if we actually did it…
House no longer has a mortgage.
How can I check.
Thank you.

If you are tenants-in-common, a good STEP solicitor will write a will which creates an IPDT ( Immediate Post Death Trust) on first death, which is very different from putting a house into any other sort of trust to supposedly ringfence it from care costs.
It rarely works, and ends up costing more money, whereas an IPDT is very useful for blended families. Mine means that I can continue to live here, or downsize using the proceeds, and when I die the proceeds are divided between my children and my late husband’s children.
Always consult a STEP solicitor , not an unregulated company salesman.
Beware of anyone who claims that a trust will save IHT or save the house from being used for care costs, as it probably won’t.

Why wouldn’t anyone want to use their money to pay for their care? It gives choice over which care home you use or maybe the option of having carers in. Most children will want the best for their parent, even if they receive less inheritance.

I'm not sure that it does give more choice - my MIL has recently gone into a care home (self-funded), and looked at several. All took state-funded residents, and a couple didn't have a place for MIL until another resident vacated their room.

I may be missing something, but I don't think she had any more choice than had she not been self-funding. The only difference is that her savings are dwindling fast. We (her children and ILs) all want what's best for MIL, and she's compos mentis, and can decide for herself anyway, so that's not an issue at all, but I don't understand why so many people seem to think that paying for care gives you advantages - in her case it didn't.