logo

Property Trusts…what are they?

PersonImage

Posted by Wolferstans Admin on 24th September 2020

A Property Trust Will is a specialist Will designed to protect a half value of your home by placing the equivalent half value of the property into a trust after the first spouse or partner dies.

When would a Property Trust Will be useful?

By drafting a Will of this kind, you are ensuring that at least half the value of the family home is preserved for your ultimate beneficiaries, usually your children. This means that whatever happens after your death, you are safe in the knowledge that some of your wealth is protected. When the property trust comes to an end, the asset (or value of it) that is held in the Trust is crystallised and passes on to the beneficiaries under your Will. It is a sensible way to protect some of your assets as for example, the surviving spouse went onto remarry, the new spouse would not have a claim at all on the asset.

Is there any way that assets can be protected should long term residential care be required?

This is a concern of many of our clients given that usually the main asset in the estate is the family home. We do not advocate gifting the family home during your lifetime and should your children or other beneficiaries of the gift divorce, die or become bankrupt then you would be left vulnerable. However, when you create a property trust Will, it only comes into effect when the first person dies, so you are able to sell or mortgage your property as you wish during your lifetime.

Should the survivor require care then the house can be let and the income used to fund their care. Alternatively, the house can be sold. The survivor’s half share in the house can be used to fund their care, so that they have flexibility to choose what care they would like. The half share which forms part of the trust will either pass to the named beneficiaries now or on the death of the survivor. The share of the property in trust should be disregarded by the local authority when making a financial assessment and calculating the assets available to pay for long term care.