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. Products like property protection trusts enable you to save a portion of your property to pass on to loved ones. This article covers:
A protective property trust is a type of legal structure that can be included as part of your will. It is designed to protect your property from being included in assessments that are carried out to determine how much you should contribute to long-term care fees. A property protection trust will covers a share of a jointly-owned property to ensure that surviving spouses or partners can continue to benefit from their deceased partner’s share in their property even when they have died. Should they have to go into long-term care facilities their share of the property
will still be protected – and can be passed on to family members upon their death.
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 also known as ‘trust wills’.
They are well suited to you if:
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 property protection trusts work 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 die.
They also would like to have the peace of mind of knowing that if the surviving person requires care, at least half the property 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 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 property 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 property 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.
Generally, a protective property trust will cost, for two £795 if your property is registered with the Land Registry, which most properties are these days.
Together a couple make wills leaving their share of their property within a protective property trust which is set up as part of the will.
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. You can find further details of other types of trusts available to help you protect your assets in the future on the UK Care Guide website.
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