I have a client who established a lifetime trust in favour of her grandchildren several years ago. The money was used to buy a house which was subsequently sold and the money then used to pay rent on a subsequent property.
The client has now had a stroke and wishes to buy (together with the trustees) a new property which has a granny annex in the form of several outbuildings in which she is likely to be living. She is going to have to put in substantially more than the trustees.
My question is will the purchase of a property as tenants in common in this situation give rise to the initial gift into the trust being caught by the reservation of benefit rules? Will a further declaration of trust over the new property identifying the shares within the settlor’s estate and the share within the trust be sufficient to enable the trust assets to be kept separate from her own and cause her no problems?
What will the SDLT position be?
Many thanks for your help
Lis Whybrow
WhatleyRecordon
Solicitors
12 Worcester Road
Malvern
Worcestershire WR14 4QU
Tel: 01684 892939
Fax: 01684 892327
From an iht perspective this is sailing very close to the wind.
I am not clear why this is necessary. Is the trust property rented out, or do grandchildren live in it who will be able to help look after grandmother?
If the latter, the only circumstances in which I would be reasonably happy would be for there to be two separate freehold titles created with cross rights for necessary services easements. The latter are accepted by hmrc as de minimis. Anything more risks an argument that there is a GWROB.
It goes without saying that any care for grandmother must be in her accomodation.
The trust money was originally use to buy a property in which the grandchildren lived with their parents. This has since been sold and the money used to pay rental on a different property Now the grandmother has had the stroke and wishes to put the money into a property with separate accommodation for her. However I am concerned that this may b caught by GROB rules.
The trust property to be purchased (not rented out) will be occupied by the grandchildren and their father as the grandchildren are still minors.
At the moment care is not needed for grandmother but the stroke has caused her to reassess things and therefore look at the possibility of buying a larger property for her to live in part and the rest of the family to live in the rest.
I’m sorry if my earlier question was unclear.
Not sure what the SDLT position is - any help there?