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Protective Property Trusts

A protective property trust is written into Mirror Wills and is enacted on the death of the first person.  It is often used to protect a person’s share of their property from being swallowed up by Care Home fees or ‘Sideways Disinheritance’.

Care Home Fees

Many of us work hard throughout our lives with the goal of owning our own home and building up some savings for retirement. Eventually we would like to leave something for our children and grandchildren after we are gone.

However, if you require long term social care and have £23,250 or more in capital, including your family home you will be expected to pay the full cost for accommodation, board and personal care. These costs can literally wipe out your entire savings and your property may have to be sold to pay those fees. This could mean that your loved ones receive very little, or even nothing at all of what you originally intended.

When anybody enters long term care they are initially “means tested” and ALL their assets are considered. Only those who have under £14,250 will escape the costs of care fees.

Sideways Disinheritance

A simple Mirror Will may be suitable for some couples but what if there are children from a previous relationship or the survivor re-marries?  In those situations it is amazingly easy for your children to be left with nothing.

Many people do not consider that after the first person has died, the surviving partner could decide to change the terms of their own Will. They could choose to leave their estate, which includes assets from the first person who died, to someone other than the children. This could be a new partner or spouse. It could even happen accidentally if they re-marry and don’t realise that this revokes the old Will they had written.

The good news is that with the right advice, there is a way to protect at least half the value of the family home and keep it for the children. This is achieved by writing your Will in such a way that it puts half the family home into a Trust when the first spouse dies. The terms of the Trust also mean that the surviving spouse can continue to live in the property held within the Trust. These are called Protective Property Trusts.

By preparing a Protective Property Trust the value of half the home is ring-fenced so that it isn’t considered if the surviving spouse is financially assessed for residential care home fees, neither can it be lost by Sideways Disinheritance. The reason is because half of it is owned by the Trust and the other half is owned by the surviving spouse.

For more information about Protective Property Trusts including an example of how it could save Mr and Mrs Smith over £114,000 please download our free Estate Planning Brochure.

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