Many clients come to me as they feel they need to put their house into trust – often “as a priority”. Others ask me to advise their elderly relatives regarding their properties.
This is a specialised area that needs to be viewed on a client-by-client basis as every estate is different. For many clients, I must inform them that a trust is not right for their circumstances, for others, we can offer several solutions. However, for everyone, we must consider the following areas:
- Why do they feel they need to put their home into trust?
- Do they need a Will trust or a lifetime trust?
- What is their income, as individuals and as a couple?
- What are their savings, as individuals and as a couple?
- Are any of their savings disregarded
- What is the state of their health as individuals at the time of putting the house into trust?
- Would they need to consider downsizing to release capital to help fund their retirement or other activities?
- What is their inheritance tax liability – do they need their residence nil rate band?
As you can see, this is not a one-size-fits-all scenario.
There are many misconceptions and much misinformation around the subject, such as the following;
- “Putting your house into trust will help with inheritance tax planning” – incorrect, if you have the right to live there, and enjoy the benefit of living there, the house will still be taxed as yours at your death.
- “Your house is safe after 7 years” – incorrect, the 7-year rule is a fictitious one, often confused with inheritance tax planning.
- “I have given my house away or intend to do so, to my children” – this is fraught with danger as your children now own your home. You have no security. If you fall out with them, or they get divorced or into money problems, your house is now vulnerable.
We have been advising our clients regarding house trusts for many years. If you feel you have now got the stage in life where you would like to consider your options, we would be delighted to talk this through with you so do email us on firstname.lastname@example.org or call the office on 0191 406 0747.