How do you sell property left in trust in a will UK?

Property inheritance is a big, complicated, confusing thing. You may be grieving, going through a really difficult time emotionally, and while you feel lucky to have gained such a valuable asset, the process seems confusing.

A will is one of the most essential legal documents when it comes to inheritance. It outlines how a person’s assets, including property and money, should be distributed after their death. In addition to addressing the distribution of assets, a will can also specify funeral arrangements, appoint guardians for small children, and name executors responsible for carrying out these wishes.

When property is left in trust through a will, the person creating the will (the testator) designates a trustee to manage the property on behalf of the beneficiaries. The trustee ensures the property is used according to the terms outlined in the trust, offering protection and guidance for those inheriting the estate.

In this article we will cover what happens when property is left inside a trust, if inherited property needs to go through probate, and how much you can inherit without paying Inheritance Tax.

What happens with property left in a trust in a will?

In the UK, property left in a trust within someone’s will is usually referred to as a Will Trust, which is a legal arrangement that allows the named trustees to control assets on behalf of the beneficiaries after the creator of the will dies.

Will trusts can be quite common when siblings are involved, especially in situations where parents want to ensure that their estate, including property or assets, is managed fairly and distributed according to their wishes.

The will will specify the terms and conditions of the trust, which can include how and when the trustees distribute the funds. Here is a breakdown of what happens with property left in a trust in a will:

1. Creation of the Trust

The will specifies the creation of a trust upon the death of the person. The property or assets that are to be held in trust are identified in the will.

2. Appointment of Trustees

The will usually names trustees, who are responsible for managing the assets placed in the trust. These trustees have a fiduciary responsibility to act in the best interest of the beneficiaries of the trust.

3. Beneficiaries of the Trust

The will also identifies the beneficiaries, who are entitled to receive the benefits of the trust, either immediately or in the future. The terms of the trust (set out in the will) will dictate how and when the beneficiaries receive assets. 

4. Types of will trusts

There are three main types of will trusts, including:

5. Protection from probate

Assets held in trust are not subject to probate, which means that they don’t go through the lengthy process of estate administration. However, if the assets are left in a trust via the will, probate is required before the assets can be transferred into the trust.

6. Flexibility in estate planning

Trusts can offer flexibility in how the assets are distributed, particularly if there are vulnerable beneficiaries or if the person leaving the will wants to control when and how beneficiaries access the property. 

What happens to property not left in a will?

If property is not left in a trust within someone’s will, then the distribution process is more straightforward. If the will clearly identifies beneficiaries for specific assets, the executor will transfer those assets directly to the named beneficiaries and the asset becomes their legal ownership.

If there is no valid will, the estate will be distributed according to the rules of intestacy, which set out who inherits the estate based on a priority list, starting with a spouse, followed by children and then other close relatives. 

If no family members can be identified, the property may eventually pass to the crown, which is also known as Bona Vacantia. 

Without a trust, there are fewer protections for vulnerable beneficiaries (e.g. children, those with disabilities) as they will receive the property outright, which may not be in their best interests.

Once the property is transferred, there is no control over how the beneficiary uses it. For example, if the deceased wanted to ensure the property remains in the family, they have no mechanism to enforce that without a trust.

Trusts can be used to manage tax liabilities more effectively. Without a trust, beneficiaries may face higher tax bills, particularly with regards to Inheritance Tax.

Do I need probate to inherit a house?

Whether you need probate to inherit a house in the UK, mostly depends on the type of ownership structure of the property and if there is a will or not. You will need probate to inherit a house if:

• The house was solely owned by the deceased.

• The property was owned by tenants in common.

• There is no will, and intestacy rules apply.

You do not need probate to inherit a house if:

• The house was owned jointly as joint tenants, and the surviving co-owner(s) inherited the property automatically.

If the deceased person owned the house in their sole name, probate will usually be required to transfer the property to the beneficiaries or heirs. The executor named in the will (or the administrator in the case of intestacy) will need a Grant of Probate (or a Grant of Letters of Administration if there is no will) to deal with the property and legally transfer ownership.

If the house was owned jointly with someone else as joint tenants, probate is not usually needed. In joint tenancy, the property automatically passes to the surviving co-owner(s) through the right of survivorship. The surviving owner would just need to notify the Land Registry of the death and remove the deceased’s name from the title.

If the property was owned as tenants in common, each owner holds a distinct share of the property. The deceased’s share can be passed on through their will or under intestacy rules and in this case, probate is required to transfer their share of the property. 

If the deceased person did not leave a will, the property will be distributed according to the intestacy rules. In this case, probate (or letters of administration) is required to transfer the property to the appropriate heirs. 

Can someone leave half a house in their will UK?

If you’ve been left half a house in a will in the UK, you may be wondering what you’re entitled to. Well, it completely depends on the type of ownership structure the deceased person had with the property. 

If the property is owned as tenants in common, each owner holds a distinct, separate share of the property (which can be 50% of any other percentage). This means each co-owner can leave their share of the property to anyone they chose in the will.

The beneficiary will inherit only the deceased’s share of the property, while the other co-owners retain their respective shares. The beneficiary and the surviving co-owner will then become co-owners.

If the property is owned as joint tenants, each co-owner owns the whole property together and when one dies, their share automatically passes to the surviving co-owner(s) through right of survivorship. In this case, the deceased cannot leave their share in a will, as it will automatically pass to the other joint tenant(s).

To leave a portion of the property in their will, a joint tenant would first need to sever the joint tenancy, converting it to a tenancy in common, which allows them to specify what happens to their share in the will. However, they will need the consent of the other owners to do this.

How much can you inherit without paying Inheritance Tax?

When inheriting or leaving a property, Inheritance Tax can be a significant concern for both beneficiaries and estate planners. Luckily there is a £325,000 threshold which is tax-free, meaning that if your estate is below this threshold you do not need to pay anything, and if your estate is more than the threshold, then you will only pay 40% on the amount over. 

But, there are certain exemptions, reliefs and allowances that can reduce or eliminate the Inheritance Tax burden, which can include:

Challenges and disputes in inheriting property

Inheriting property can become more complicated if there are disputes or challenges related to the estate, some common issues include:

• Disputes over the will: A will may be contested by family members or other parties who feel they are unfairly excluded or that the will is invalid.

• Claims against the estate: Certain individuals, such as dependents or estranged family members, may file claims against the estate under the Inheritance (Provision for Family and Dependents) Act 1975, arguing that they are not adequately provided for.

• Unknown family members: In some cases, unknown or estranged family members may come forward after a death, complicating the distribution of the estate.

• Disagreements among beneficiaries: There may be conflicts between beneficiaries about how to handle certain assets, including whether to sell or keep a property.

These types of disputes can delay the inheritance process. In such cases, legal advice is highly recommended to protect your rights and ensure the estate is distributed correctly. Sometimes mediation can be used to reach an agreement without going to court.

When do you actually own property left in a will?

Inheriting property through a will is often a lengthy process and you won’t gain full ownership of the property until the estate administration is finalised. This can take several months, or in some cases, over a year.

Ownership can only be transferred once probate has been granted, and all outstanding liabilities, such as debts, taxes and expenses have been settled. After this, the executor of the estate can transfer the property into your name. This involves notifying the Land Registry and completing the required legal formalities to officially update the ownership 

It’s important to note that you cannot sell or mortgage the property until the legal transfer is complete and you are the registered owner.

Inherited a property through a will, how do you sell?

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