An increasing number of people are starting to consider the possibility of a need for care in the future, and the financial impact it may have on them. As part of that thinking, they are also looking at putting property into trust.
Products like property protection trusts enable you to save a portion of your property to pass on to loved ones. They are also known as ‘Property Trust Wills’ ort Home Protection Trusts.
In this article we’ll cover:
– What is a Protective Property Trust Will?
– Who are these trusts best suited to?
– How do home protection trusts work?
– How much setting up a protective property will cost?
– How to set up a protective property trust
– The disadvantages of these trusts
You can see a version of this video on property protection trusts on Youtube.
A protection property trust or a protective property trust, as it is also known, is a type of legal structure that can be included as part of your will.
A lot of people have their money tied up in their house. A property protection will is designed to protect your home from being included in assessments that are carried out to determine how much you should contribute to long-term care fees.
A Property Trust covers a share of a jointly-owned house to ensure that surviving spouses or partners can continue to benefit from their deceased partner’s share in their home even when they are gone.
Should they have to go into long-term care facilities, their share of the property may be protected – and can be passed on to family members upon their death. It is also a useful tool for anyone looking at their estate planning and in particular ways to avoid paying inheritance tax.
This type of will is best suited to couples that are married or in a civil partnership who are concerned about the possibility of a long-term care requirement in the future.
They are well suited to you if:
– You would like to protect your estate and home against the cost of possible future care fees
– You want to ensure that your children receive at least half of the value of your house upon your death
– You’d like to ensure that your partner or spouse can continue to live in and benefit from your share of the property upon your death
Normally when you set out your wishes and make a will, your estate and assets will be passed directly on to your beneficiaries. A care requirement and other circumstances can sometimes complicate or affect this process.
For this reason, property protection trusts and products like them can hold assets on behalf of the beneficiaries to guard against the effect of inheritance tax and deductions made due to care costs.
The best way to explain how the trust 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 person 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.
This type of protection trust 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
The amount a Protective Property Trust Will costs will vary depending on the complexity of your affairs
Generally, a Protective Property Trust Will costs between £350 and £500 plus VAT.
The cost of a Protective Property Trust Will is higher for couples registering together than it is for individuals. Usually, this is a fixed fee – a one-off payment for the setup and registration of the plan.
Together a couple makes a will leaving their share of their property within a protective property trust which is set up as part of the will. You will then become trustees. This type of will can be set up online via the trusted provider, or in person.
It is a good idea to speak to a solicitor and/or specialist later life financial advisor when setting up this kind of trust.
They can be complex to arrange – especially if your situation is complicated.
This will naturally affect the cost, but the additional amount required for professional assistance is worth paying if you can afford it.
We are able to help you with this and you can find a phone number to call below or you can book an appointment with a Trust specialist who will help you set it up.
There aren’t any directly comparable products on the market – but there are different types of trusts you could consider depending on your circumstances.
For example, if you have a significant amount of investments and assets, including property, a Flexible Life Interest Will may be more appropriate for you. ALternatively you could also look at using a Family Protection Trust.
A Discretionary Trust Will is a specialist product designed to protect property assets and other investments for vulnerable or mentally incapacitated individuals. You can find further details of other types of products available to help you protect your assets in the future here on the UK Care Guide website.
Another type of trust to look at is a life interest trust. This allows you to allocate a beneficiary who then has the legal right to receive income from or use a property named in the trust.
If you’d like further advice on trusts, charities such as Age UK and Citizen’s Advice Bureau can offer some limited guidance, but you would always be advised to speak to a Trust specialist.
Whilst there are many advantages, you do need to be mindful of the disadvantages of using a Trust. What those disadvantages are can differ depending on your personal circumstances.
Therefore, we would recommend that you speak to a Trust specialist who can better understand your circumstances and then outline what the disadvantages may be for you.
You can use the contact information below to get legal advice on setting up a trust.