Many of us nowadays have a large part of our personal assets tied up in a property such as the home With more people requiring long term care in later life, protecting that property if you share it with another person is becoming increasingly important.
What is a Protective Property Trust?
You can put a provision in your will that, when you die, the share of a property you own is put in trust while allowing your spouse or partner to live in the property for the rest of their lifetime. Upon their death, it can then be passed onto your children. This has important ramifications where assessments for future care may be made and property might need to be sold to cover the costs of that care.
This type of trust only applies if your property is held as tenants in common. That means you and your partner own the property together or you own part of a property in your own right, for example, with a friend or family member. The latter allows you more flexibility when planning for asset protection in the future and can protect you against issues such as community care tax and inheritance tax.
I’ve Got a Mirror Will
Mirror wills are largely identical wills that people may create to leave their share of a property to the surviving partner when they pass away. In most cases, people hope that when the surviving partner eventually dies the estate will go to their children. Unfortunately, this is not always the case, especially if one or both partners need to go into residential care.
While you can’t transfer your property to relatives to specifically avoid paining nursing home fees, you can include a Protective Property Trust in your will. This includes instructions that when you or your spouse dies, your share of the property is automatically put in trust for your children. The surviving spouse continues to live in the property and the money is not used for residential care fees.
A Protective Property Trust has other benefits as well. If you have children from a previous marriage or relationship and want to ensure they get a fair share, a trust can be put in place which does not put your existing spouse or partner at a disadvantage. You may also believe that your spouse will marry again after you pass away and want to protect your children from this and ensure they get their fair share of the estate.
How Do I Create a Trust?
It’s important first to note that you can’t put in a Protective Property Trust if you are a sole owner or you have inherited the property after your partner has already passed away. The trust needs to be put in place while both partners are still alive and in good mental health. It’s also important to change a joint tenancy to what tenants in common arrangement – this means you each own a half share of the home.
It’s important to work with a solicitor that understands your needs and can put together a legally binding will that includes a Protective Property Trust clause. If you would like to find out more about how you create this kind of provision in your will, contact the team at Forster Dean today.