Bispham Legal Services

Will and LPA Advisors

Property Protection Trust

PROTECT YOUR PROPERTY FOR YOUR FAMILY

Property Protection Trust

Why do you need a Property Protection Trust?

A Property Protection Trust is an affordable and easy way to protect your share of your home’s value. For example, when you die, your home’s value could be used to fund care costs for your partner, meaning less or no inheritance to pass on to your loved ones.

  • Protecting your share of your most valuable asset.
  • It is a common belief that, if you are married or in a civil partnership, your spouse or civil partner will automatically inherit everything you own when you die. In fact, the law sets out rules that determine how your assets are to be divided if you should die without leaving a Will.
  • No one wants to leave their partner with a complex legal issue, but if you are an unmarried couple there is no “common law” equivalent to a legal marriage
  • A Property Protection Trust is an affordable and easy way to protect your share of your home’s value.
  • You choose who will inherit your share.
  • Depending on where you live in the UK care homes can cost an average £28,500* per year. Anyone with assets over £23,250 must pay the full cost. (*source: Paying For Care report. Laing & Buisson in 2013/14)
  • 1 in 10* who enter the care system ends up paying over £100,000 (*source: bbd.co.uk/news/health2015)
    Under a Protective Property Trust (PPT) the surviving spouse can move home without any issue. If the new property costs less than the original, then the profits can get split equally between the surviving spouse and beneficiaries.

Property Protection TrustsWhy should you do it now?

No-one knows what is around the corner. If you leave it until you need it, it will be too late. So let’s get it done.

Business Relief with Bispham Legal ServicesWhat happens without a Property Protection Trust?

  • Your children could be disinherited
  • If you go into long-term residential care then your home may have to be sold and the proceeds are then vulnerable to attack by the Local authority. A similar problem arises if the survivor goes into care and the home is potentially sold.

Why should you use Bispham Legal Services Estate Planning?

  • Thousands of Property Protection Trusts are prepared each year.
  • A standard Will only states who is to benefit when you die. Our Property Protection Trusts ensure that your estate finishes up where you want it – quite a difference
  • You keep control.

What can Bispham Legal Services Estate Planning do for you?

  • Expert advice.
  • Home visits at no extra cost and no Pressure-selling.
  • We do your Property Protection Trust for you.
  • Simple as that.

Why do we do it?

  • Everyone benefits.
  • You get the Property Protection Trust you need.
  • Over 50% of clients go on to use us for other services.
Each co-owner writes a PPT Will. In PPT Wills each co-owner leaves their share of the home to a Trust (technically a life interest trust). The beneficiaries of the Trust are the children (or other nominated beneficiaries), but the Trust gives the surviving co-owner the right to live rent-free in the deceased co-owner’s share of the home (the surviving co-owner is known as the “life tenant”) for as long as they like. If the life tenant remarries or goes into care, the deceased co-owner’s share is protected and goes to the children (or other beneficiaries) when the surviving co-owner dies.

The advantage of this arrangement is that if the surviving co-owner goes into care early their share of the house only will be assessed. Under current guidelines (Charging for Residential Accommodation Guide (CRAG), published by The Department of Health), the surviving co-owner’s share of the house will be valued at less than their share because the market value of the home will be reduced due to the nature of the ownership. A 10% reduction will be applied (to allow for the costs of selling) and, in fact, the value of the share may very well be nil (CRAG paragraph 7.014).

The gift of the property into a trust counts as a gift to the life tenant for Inheritance Tax (IHT) purposes, and so if the life tenant is a spouse or civil partner this does not use up any of the deceased co-owner’s Nil Rate Band (NRB) for IHT purposes (currently £325,000 2011/12). This is important under the new transferable NRB rules.

It is possible to protect assets other than the family home. If instead of leaving these assets to a partner, these assets are left in a Flexible Life Interest Trust (FLIT – technically a defeasible life interest trust) for the surviving partner the surviving partner is allowed to have an income from these assets but not the capital (which typically passes to the children on the death of the surviving partner). As the assets in the trust do not belong to the surviving partner they do not form part of their capital when assessing long-term care costs if they should end up in care.

Single People (or Single Owners of Property) the option of a PPT Will is not available to single people (as there is no-one else to protect).*

* We have alternative methods of protecting the single property owner.