TRUSTS
Your Trust options are a little more complex, but we do our absolute best to keep things simple and remove as much jargon as possible. We offer a free home visit and one of our experienced consultants can visit you in the comfort of your own home and explain everything over a cup of tea. The three most common types of Trusts for our clients are covered just here.
Property Protection Trusts
Protect your share of your property for your children and loved ones.
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Many of us worry about losing our home to pay for our care costs. Did you know that in the event of a surviving partner getting remarriage, their existing Will is revoked/void? In addition, many of us worry about losing our home to pay for our care fee costs. A Property Protection Trust is an affordable way to protect "your share of your home" so it can be passed on to the people that you care about.
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How it Works
The Property Protection Trust is set in to your Wills.
When the first partner dies, their share of the property is passed into their trust, protecting it for their beneficiaries.
The remaining partner is able to live in the property for as long as they wish.
Should they then need to pay for their care, your share of the property CANNOT be used to pay for it.
Should the surviving partner remarry, your share of your home is protected for your beneficiaries.
When the surviving partner dies their share along with yours is distributed in accordance with your individual Wills.
Severance of Tenancy
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Most couples purchase and own their property together on a joint basis. This means that they are “joint tenants” and in this case following the first death, the deceased share automatically passes to the surviving partner and owner. If you amend your property to “Tenants in common” this means that you each own a proportion of the property. This is normally 50% each but can be different if required.
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A Property Protection Trust can only be effective if you change your property ownership to Tenants in Common by “severing the tenancy”. The process is straight forward and does not affect or restrict any future sale.
Living Trusts
With a "Living Trust" you can update your Will as you wish and your "Living Trust" works alongside your Will, guaranteeing your wishes and allowing you to leave more of your inheritance to your loved ones. With Your Living Trust you simply place your Home or assets into the Trust and as the main Trustee you remain in control of your asset at all times whilst you are alive, or still have capacity. You can use them as you normally would, such as sell/buy your property, spend your money as you wish and make investments.
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Benefits of the Trust
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Normally no need for probate
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Prevents sideways disinheritance
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Beneficiaries inherit quickly and hassle free
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Avoids claims against your estate
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Avoids loss of control due to incapacity
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Avoids beneficiaries inheriting at the wrong time (EG: pending a divorce)
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Helps avoid passing on an inheritance tax liability to future generations
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Care Fees
There is no legal way that you can dispose of assets, including your home to avoid paying care fees later in life. This is called “deliberate deprivation” of assets and the Local Authority would normally contest this. Whether you have transferred assets or your home to your children or set up a trust solely with the purpose of avoiding care fees, it will not work.
However, although care fees cannot be the sole reason for setting up a Living Trust, it may be a benefit if set-up at the right time (when care is not foreseeable) for the right reasons and for the right people. As a result, many of our clients have found that the assets held within their Living Trust have been disregarded during a “means tested assessment” for care fees. The bottom line is that as a minimum, in the event of needing Care later in life, most of us would prefer that our family and loved ones are in control of our assets and able to manage our affairs accordingly.
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Care Act 2014
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Free Guide to Trusts
If you would like to find out more about Trusts, you can download our Free Guide to Trusts here.
Will Trusts
Written within your new Will, some examples include:
Right to Occupy Trust
A right to occupy enables someone to remain in a property even though it's being left to other beneficiaries. This could be anything from a child still living at home, or a new partner not being made homeless. The Trust can be written to protect those people for certain periods, or come to end due to events such as remarriage to cohabitation.
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Discretionary Will Trust
A Discretionary Trust is created on death to hold the beneficiaries inheritance. This can protect vulnerable or disabled beneficiaries. They can also prevent an inheritance being lost to the beneficiaries divorce, bankruptcy or IHT issues.
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(Flexible) Life Interest Trust
Life Interest Trusts are used to hold beneficiaries inheritance but gives a 'life interest' or income to another person. Quite commonly new partners are not to inherit over children, but they may still need an income or house to live in during their lifetime. With the correct advice, these trusts can also save a huge amount of inheritance tax being paid by beneficiaries.
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