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.

MT62

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.

This is true, it is intentional deprivation of assets.

Having twice been responsible for family members in care. I found that being self funding did give choice in what care home they went into.

Both were emergency admissions. For the first one, the surgery psychiatric nurse, who had visited ny uncle in hospital gave me the names of nursing homes he felt would suit my uncle's circumstances. I viited it, they had a space. He went their supposedly on a temporaray convalescence stay, liked it so much he stayed there.

In the second case it really was an emergency, after a couple had proved completely unable to cope at home after hospital discharge and 3 visits a day from a carer. Social Services found an immediate location for them, but it was a very expensive care home, beautiful, but expensive, then I and another relation looked for somewhere else less expensive. We looked at several before finding one we thought satisfactory

I was looking after these relations for several months before they went into care, and had to arrange respite care on several occasions when I was away. This enabled me to try a couple of local care homes. They were fine for a weekend or week, but I did not consider either of them places I would consider for long term care.

What are the thoughts on equity release? Our daughters are dead against the idea.

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Bossy

If you have 'real money' then you would say you were 'wealthy' not 'rich'!

Unless you are 'new money' of course as then you wouldn't know and/or understand the etiquette!!

But, of course, 'old money' would NEVER speak of money anyway - ditto religion, politics and sex!!!

(And yes, there are lots of other subjects that make interesting topics around the supper or dinner table!)
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My parents in law had very complicated trusts in their wills, the only people that really benefitted were the lawyers.

I went to a meeting of the trustees and had to admit I didn’t understand how the will was structured, at that point others spoke up too!

My advice is to understand what you are signing up for and to realise that nursing home fees cannot be avoided.

Estrellita

What are the thoughts on equity release? Our daughters are dead against the idea.

Your daughter are correct listen to them in most cases it's a bad idea.

Madmeg

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.

in my view and from experience Tenants in Trust works well and they are always advising this these day for the simple reason, that if your husbands ends up requiring care your 1/2 of the house cannot be used for care costs after you die, but will go to your daughter instead of paying for your husbands care. This is water tight as long as you do not do it once care is expected or has happened.
So to answer your question, both solicitors were right.

David49

Estrellita

What are the thoughts on equity release? Our daughters are dead against the idea.

Your daughter are correct listen to them in most cases it's a bad idea.

They can if you make the arrangement before you knew that any type of care would be needed. You need a solicitor who deals with this as a speciality as it has to be watertight.