Property Protection Trusts from £450+VAT
Worried about Care Fees?
Unfortunately, some people in the past have decided to give their homes away to their
children during their lifetime in the hope that this will protect their property for their children
if they go into a care facility, only to find the money being clawed back by the Government.
They also leave themselves vulnerable to being forced out of the house by their children if
their children get divorced or become bankrupt or in some cases, because their children just
want them out of the property.
Property Protection Trusts are probably the best way of at least protecting half of the client’s home for their children to inherit without having to take out expensive insurance. The most common reason for this Trust is to protect at least half the value of the clients home if one of them dies and the other has to enter a residential care or nursing home, currently costing around £2,000 - £4,000 per month, or if the survivor remarries and inadvertently disinherits the children by not making an appropriate Will after they have remarried. If a person’s total assets ( including the value of their home) amount to more than £23,250, the Local Authority will expect them to pay care fees in full, it is not long before lifetime savings and assets are dissipated leaving very little for the children to inherit. Once assets fall to the £23,250 limit, the Local Authority will contribute part of the cost of care, but people will be expected to continue paying until their assets are reduced to £14,250. At this point, the Local Authority will take over the payments.
How a Protective Property Trust Works:
Mr and Mrs Smith both own their property in joint names. This means they own the whole of the property together and therefore regardless of what they say in their Wills, one of them will inherit the whole of the property upon the first death.
To overcome this, we change how the property is owned by altering the ownership for Joint Tenants to Tenants in Common through ASP Wills drafting a Deed of Severance which is attached to the house deeds, a copy of which is sent to the Land Registry. This means that they will both now own a share, normally half of the property each.
We then set up a Trust in each Will giving the share that each client owns Upon Trust for the eventual benefit of their children and also giving a lifetime interest to the survivor over the share owned by the children. This allows the survivor to live in the property as long as he/she may wish or sell the house under the terms of the Trust and purchase another. Normally the survivor is the Trustee, so therefore this works very well. The children have no rights over the property until the survivor dies and it is then that they receive their inheritance or if the survivor gives up their life time interest in the property by going into a care facility, the children then receive their share of the property value once it is sold.
Although nothing is 100% sure because of potential future changes in legislation, the above Trust is generally recognised as the safest way of safeguarding the family home without having to go to great expense.