Most people know how important it is to make a will to protect their family. What they don’t know is that a simple will isn’t always enough. Between care fee assessments, debts, remarriages and inheritance tax, life can whittle away your legacy – even forcing the sale of the family home.
Enter the property trust will.
What is a property trust will?
A property trust will keeps your home safe for your loved ones after you die. It does this by placing your share of the property in a trust, so that the people you want to benefit from it can – but without owning it.
With a property trust will, your partner can still live in the home you share after your death. But because they won’t own your half of the property, it:
- Will be left out of care home fee assessments, if your partner one day needs care.
- Can’t be taken by the council to pay for their care.
- Is kept safe for your children, even if your partner remarries, changes their will or has children from another relationship.
- Is left to the people you want: it can’t be taken by creditors or given away in divorce settlements.
In short, it protects your children’s inheritance, and your partner’s security.
A property trust will in action
John and Alice are a married couple with two adult children, Lucy and Aaron. They own a house together. When they make their wills, they add a lifetime property protection trust.
Here’s how that property trust will works in practice:
- If John dies first, his half of their house will go into the trust. He is the settlor.
- Alice will be the beneficiary: she can live in the house for as long as she likes.
- Alice and the children, Lucy and Aaron, are all trustees. Trustees manage the property in the trust.
If Alice decides to sell, that’s fine. All it means is that John’s half of the profit will go back into the trust for safekeeping. If she likes, Alice can borrow or use this money, but as before she doesn’t own it. The trust is set up so that after Alice dies, everything left in the trust (property or money) will go Lucy and Aaron.
Here’s where the benefits come in…
Care home fees and property trust wills
What if Alice needs social care as she gets older?
Care for elderly and disabled people costs over £30,000 a year. Whether or not you get that care for free or pay it yourself is based on your savings and income.
If Alice’s assets (including her house) are worth more than £23,250, she’ll have to pay all her care fees herself, every year, until she has less than £23,250 left.
If John had left his half of the house to Alice without a property trust, all the money from the sale of the house could be used to pay for her care. But because John’s half is in a trust, the council can’t claim it. It is kept safe and will go to Lucy and Aaron when Alice dies.
Remarriage and the property trust will
61% of men and 19% of women remarry after the death of their husband or wife.
If Alice remarries after John’s death and doesn’t make a new will, Alice’s new husband, Bob, will be entitled to most of her assets when she dies, including anything John left her outright.
But as John’s share of the house is in the trust, Bob can’t claim that. It will go to Lucy and Aaron instead, as John intended.
Leaving property in trust instead of to your children
You might be wondering: why didn’t John just give his half of the house to Lucy and Aaron? Well…
- If Aaron or Lucy get into debt, the trust means their creditors can’t force the sale of the home. Orders for sale for jointly owned properties aren’t common, but if you can’t pay a debt any other way it is a possibility. The trust keeps the house out of their hands.
- If Aaron and Lucy fall out with Alice, they can’t force her out of the home. This is one of the reasons why lifetime property protection trust wills are popular with blended families: it keeps step-parents safe, even when relationships are fraught..
- If Aaron or Lucy get divorced, the home would be kept out of the settlement. Sadly, you can’t predict what will happen in someone else’s relationship. And inherited properties are not automatically excluded from the assets to be divided. The trust keeps everything clear while Alice still lives in the home.
You shouldn’t make a protective property trust will just to avoid care home fees. If the council thinks you’ve deliberately deprived them of assets they can ignore the trust and consider the property in their assessment.
How much does a property protection trust will cost?
Property trusts are incredibly complicated. If you’d like one included in your will, it’s essential to get professional advice.
At Beyond, we offer fixed-fee property trust wills for two people for £1,434.
This is more than our simple couple’s will (at £135) but in the long run it can save your family hundreds of thousands of pounds in care home and legal fees.
It’s also stress-free: just give us a call on 0800 054 9793 for a free, no-obligation consultation about your needs. If you’d like to go ahead, we’ll set up a visit or a call (if you prefer) to finish the property trust will. It’s quick, easy and professional.