Property Protection Trust Wills
By considering the family home as part of a planning exercise for the future, couples who are either married or living together as partners, can sever the joint tenancy of their family home and set up Property Protection Trusts in their Wills.
What is a Property Protection Trust?
A Property Protection Trust gives a person’s share in the property by Will to his or her own children, other family members or chosen beneficiaries. This is to prevent the share in the property passing to the other joint owner who could then re-marry, or make a new Will, in favour of his or her own children or beneficiaries. In addition, the trust would prevent that half share being taken in future care fees or, if the survivor became bankrupt.
The trust will ensure the surviving spouse has the right to carry on living in the marital home for as long as he or she needs.
If a Property Protection Trust is in place can the survivor move house?
One of the many advantages of the trusts are their flexibility. Say Mr and Mrs Jones own a home called at £400,000 and have Property Protection Trusts set up in their Wills. On the death of Mr Jones, if his widow downsized to a home worth £200,000 then she can use the late Mr Jones half share to do. A Trust Deed or declaration of trust would then be drawn up to say that Mr Jones’s estate would now own 100% of the new house. This would then be registered with H M Land Registry.
If, however, the new purchase is priced at £250,000 it can be made using Mr Jones’s estate’s share of £200,000 and £50,000 from Mrs Jones. The trust deed would be updated to record the new shares in the property i.e., Mr Jones’s estate would own four fifths and Mrs Jones one fifth.
Warning
Anything you do can be caught under the “deprivation of capital rules”. These rules allow the local authority to disregard any arrangements which are seen as a sham. Any planning must therefore be done early enough and undertaken as part of a later life planning exercise.
How can Joanna Connolly Solicitors help?
By carrying out a full review, we can look at the ownership of the home and draw up new Wills to protect both the rights of the survivor to carry on living in the house as well as each person’s ultimate beneficiaries.
Our Cheadle Avenue office has ground floor access and outside parking available.