Hi Texas0073,

Welcome to the forum.

Back in 2011 the minimum timescale for a Trust Deed was 3 years. Once a person had paid for 3 years they could then use their monthly payments to pay over any asset value within an additional two years normally.

An example would be:

Client can afford £200 per month for 36 months. The client also has confirmed equity of £4,800 and therefore at the end of the 3 years the payment continues to pay the £4,800 into the Trust Deed for two years.

In terms of the jargon, the summary report is really just saying that the equity hasn't been paid over yet therefore remains outstanding and also advising that the client has a policy but that this doesn't have a surrender value which means the policy can't be cashed in.

Does that make sense and help? It does in my head but it's been a long week...

David

Thanks for reply. Without putting any details live on the forum. There numbers are roughly contributions @ £250 x 36 mths
They have a equity figure which I won't post but the figure is halved as the property is shared. From your example does this mean they pay the £250 for three years thereafter the added two years are to pay the equity figure. ?
If so, is that figure final as obviously property value had increased so equity has too? So for probably basic questions but trying to sort it for them. They were basically told nothing apart from tick and sign here

Hi Texas0073

In a word yes. The first 36 payments are allocated towards contributions and each payment after that goes towards reducing the equity.

The trustee should have provided a final equity figure to be paid. That way it's not an ever moving target.

Mark

Hi Texas0073,

If the property is jointly owned and only one of the owners has entered into a Trust Deed then it's half of the equity available i.e. total equity £10,000, one half share thereof to be paid is £5,000.

That correct, the added two years are to pay the equity figure.

The equity amount and the figure to be paid over should have been agreed in writing at the outset of the Trust Deed and fixed at that amount. Even if the property increases or decreases in value it should still be the same amount as agreed in writing at the outset of the Trust Deed as this is what creditors were proposed and agreed to.

It's common that we hear that things have not properly been explained which is why it's crucial to get everything confirmed in writing.

If you are in any doubt with regards to the equity amount ask for a copy of the original paperwork signed at the start of the Trust Deed.

Hello Texas0073.

The answer to your question is that it will depend upon the nature of the agreement at the start.

If your in laws aren't sure what that was they'll really need to contact the trustee to confirm exactly what the expectation is.

For example, a sum of equity may have been fixed at the start. Alternatively it may have been the case that the property would be valued again later to set a figure.

We have heard here of firms handling this in different ways.

Thank you all for replying and taking the time to do so

They have two summary reports The first runs from Feb'11 to Aug'11 and has an Total realisations from equity as X. The other runs Feb'11 to Feb'12 which includes the first period and has new higher Total realisations from equity.

Should they expect new Summary which shows it higher again?

I'm not sure we can answer that Texas0073.

Sorry to repeat myself, but some communication with the trustee is necessary for everyone to know exactly where they stand.

Thanks,

Turns out the deed was totally mis-sold to them.
In law remembers being in an ASDA cafe of all places and being told just to sign and tick it all and that they would do the rest.

Now they want to finish the deed after in law has retired and equity figure they are quoting now is different to the contract. Im assuming they have an evolving clause meaning they can change the equity at any time.

At the time equity was £20k and due to it being shared its £10k, now with property increasing in value equity sits around £64k = £32k owed.
I was sure as the contract stated it was £10k that would be the sum, but apparently not!!
Now to finish the deed Darrington Cean (See what i did?) requiter full £32k PLUS the cheek of £7k fees.

To say in laws are devastated is an under statement. At no point did they expect there to be no fee, but the long and short of it is, n law has knocked her pan in for 35yrs on NHS as a Physio and her lump sum has to go to the deed.

Is there any chance of a complaint re the mis-selling at start? I doubt it but I'm trying to help them any way I can.

Hi Texas0073

Equity, in my experience, is the single biggest issue in Trust Deed as it is the one thing that can dramatically change the landscape if this alters.

The crux of the matter will be what was in the original agreement. We, as a firm, have the valuation carried out before anything is signed and get a copy of the redemption. That was there is a letter/memo issued which states quite clearly the equity position before anything is signed. It may be worthwhile checking if a valuation was instructed and what the agreed position was at the time of signing.

Mark

A valuation was completed at the time of the deed.
In law has to spoke. To company in question and apparently they signed paperwork gave then the house as an asset and that the equity can evolve. A copy of this paperwork I can assure you was never sent as we have every piece of correspondence from them in a folder. The company claim they have this paperwork

Hi Texas0073

Probably best to request a copy which I assume will have been signed.

Mark

Yes. Doing that now. At time of the deed Father in law had to quit job and was struggling due to depression and mother In law was desperate. Unfortunately the seller of the deed totally saw them coming and took them to the cleaners

Hi Texas0073,

I'm disappointed to read of the problems your in-laws are now having with the Trust Deed.

I'd 100% agree with Mark regarding the equity being the biggest issue in a Trust Deed. This must be established before anyone even considers a Trust Deed or a Sequestration and then confirmed in writing with regards to exactly how the plan will work. Often we hear of problems when it comes to equity and someone's property which really does shock and disappoint me as these advisor are playing with people's lives.

Ask for a copy of the original paperwork which was signed at the outset and also ask for a copy of the ÔÇ£statement of affairsÔÇØ. This lists what assets a person has and what creditors could expect to receive from the assets.

When we proceed with a Trust Deed we issue the client with a Terms and Conditions letter which summarises everything that has been discussed and also exactly what the position is with any assets. This also gives the client 7 days to cool off and think about things before the Trust Deed is legally effective. It's the clients record of everything for them to keep which they then can always refer back to. Every company is different in terms of how the deal with this part at the outset but I would check with the Trustee to see what their procedure is and also ask for a copy of this also.

The equity in my opinion should be based on what it was at the outset i.e. based on that valuation and also the redemption figure that should have been obtained. This should have effectively fixed the equity amount.

If you disagree with the level of the valuation you can obtain your own one.