I have been consulted by a very elderly couple who made wills and set up a revocable lifetime trust with a firm of will writers in 2013. They have just re-read the trust document and do not understand it. There are ambiguities and inconsistencies within it which are likely to cause difficulties when the trustees exercise their discretion. The settlor and sole trustee is the husband, the co- trustee ( only to act as such on the death of the settlor) is the wife. The trust property is their home in which they both still live. The wife is named as a potential beneficiary.
I am assuming the trust was set up to avoid the need for a grant of probate as there is no IHT advantage because of the reservation of benefit and if the property generated an income I believe this would be treated as the income of the settlor… A collateral benefit of a reduced liability for care fees may well have been discussed .
The settlor may choose to revoke the trust. If the value of the trust property is over the IHT threshold will this trigger an exit charge and if the property has increased in value will there be a CGT charge for the trustee or will neither apply if the trust is treated as a bare trust.
Janet Calvert.
Dootsons LLP