What does it involve and how does it work?
Normally when you set out your wishes and make a will, your estate and the value of your assets will be passed directly on to your beneficiaries, likely your surviving spouse, then after your death to your children. A care requirement and other circumstances can sometimes complicate or affect this process.
For this reason, trusts and products like them can hold assets on behalf of the beneficiaries to guard against the effect of IHT and care costs reducing the value of your estate.
An example of how a Property Trust Will works
The best way to explain how trusts works is to use an example.
Let’s say Mr and Mrs Bloggs jointly own their home. They want to ensure that their respective shares will be passed to their children when they pass away.
They also would like to have the peace of mind of knowing that if the surviving spouse requires care, at least half the home can be passed on to their family members.
If Mr Bloggs dies before his wife his half will go into trust – with the remainder left to his wife. She then has the common right to occupy the property or move house if she wishes.
If she requires long-term care at some point her husband’s share of the house remains in trust and cannot be taken into account during assessments conducted to determine the amount she will need pay towards her care.
In short, 50% of the value of the home cannot be taken and used to pay for care fees – and the property cannot be sold to pay for care fees.
These trusts covers every eventuality. Even if Mr and Mrs Blogg’s children divorce, predecease them or declare bankruptcy, they still retain occupancy and their share in the property is fully protected. Upon Mrs Bloggs’ death, the half share of the property is transferred to her children free from Capital Gains Tax.