Many Solicitors and Will writing firms still rely on Protective Property Trust Wills with life interest to protect property against potential care fee’s. These firms may charge almost the same prices as Will’s with better quality.
If you have one of these Will and Trust combination here are the disadvantages of a protective property trust will:
If the current will include’s a protective property trust we would expect the client’s to be Tenants in Common on the land registry report, both named on the land registry, as this type of estate planning does not work with joint ownership.
Executors/trustees are spouse and family, they will need to understand their roles and legal responsibilities in these Wills, in our experience they rarely do especially now with Residential Nil Rate band tax allowance as well as the Nil rate band tax allowance.
On first death, the share of the property is directed to the trustees and the spouse has a life interest in the trust’s half allowing her to stay in the property until her passing. This can be effective for care planning (if jointly owned as Tenants in Common) as the survivor then owns half a house, with the trustees owning the other half.
However, any residue other than the property is for the spouse absolutely. (This means any investments, savings or any other assets on first death do not pass to Trust, instead they pass directly to the spouse/partner and they are exposed for long term care fees, marriage after death, divorce or separation of their children, grandchildren, creditors/bankruptcy.
On 2nd death the whole estate passes to the children/beneficiaries absolutely, so not in trust, including the whole house, as the trust ceases at that point. The estate is not ringfenced and this means that all is at risk once again from their divorce, creditor claims, care fees, etc. The estate then adds on to the children’s/beneficiary’s estates and is further calculated for Inheritance tax even if your estate has already paid these taxes when you passed.
Let us check your Protective Property Trust Wills
This type of planning has been around for in excess of 20 years and is still the choice of many solicitors and will writers. At DB Consultancy we offer more. If you are unsure of the protective property trust will planning that has been done for you please contact us. We can help you understand what you currently have without any obligation.
Remember it’s not about having a will.
It’s about having the right will for you and your families protection.