I have husband & wife who are settling a jointly owned rental property into a trust primarily for the benefit of their three adult children.
If they want to include a widow/widower benefit clause, does this cause an issue within a jointly settled trust (settlor interested on death of spouse?) and is it better to settle into two separate trusts?
Thanks
Joint settlors are largely to be avoided. Although the tax law can be moderately and apparently helpful someone will probably spend a lot of time trying to ensure that it is not the opposite. You yourself raise exactly such an issue which is much easier to deal with by separate trusts. It seems uncontroversial to seek to avoid anything which is likely to involve a future dispute with HMRC or, the gods forfend, litigation. The consequent duplication of documentation in my experience is usually worthwhile and I say that as one whose own affairs are so organised.
Jack Harper
The issue with separate trusts may lie with HMLR, who will only register one legal interest and are not interested in separate equitable ones.
As Iain says there is only one legal title. If the same persons are trustees of both spouses’ trusts they will be registered as legal owners at HMLR. If they are not then the exercise also needs to deal “off Registry” with the fact that the persons who are registered (with a Form A restriction and limited to four in number) in the event will hold the legal title on trust for more than one trust, the trusts fund of each comprising presumably 50% of the equity.
Jack Harper