There are a number of different types of trust which can be included in a Will, for a variety of reasons, so that assets are protected. Based in Stevenage, north Herts, A.R.K. Lasting Powers & Wills concentrates on the most common types of trust. Our service is friendly, professional… and jargon-free. The trusts we offer would not generally result in any Inheritance tax savings. It would be advisable to obtain advice from a financial advisor or accountant if this is something you are particularly concerned about.
Protective Property Trusts (also known as Life Interest or Right to Occupy Trusts)
This type of trust is the one for you if you are concerned about your home and worried about trying to protect it for your children. When a property is owned jointly it will automatically pass to the survivor on first death. This would then mean that the survivor becomes the sole owner of the home and they can do what they like with that asset in their Will. For example, they could leave it to a new partner in their Will, or it could be lost to care home fees if they needed care so they would have nothing to leave in their Will.
When you put a Protective Property Trust in your Will you have to change the way your home is owned so that you own 50% each (known as being Tenants in Common), rather than being joint owners. This is a simple process which will involve you signing one form.
Once you are Tenants in Common you can choose how you leave your 50% of your home in your Will. The idea is that you would not leave it to your other half, but you would leave them the right to live there for whatever period you decide (often until they die). The survivor would not own the whole property – they would only own their 50%. This should protect the 50% of the person who has died from a care fee or new relationship scenario. The survivor could only ever leave their 50% share to a new partner. The other 50% would not belong to them.
The 50% belonging to the person who has died would be transferred into Trust, often for the benefit of children. The Trustees would look after the 50% share of the person who has died; making sure that the property is maintained, insured etc. If the survivor decides that they would like to move they could do so as long as the Trustees agree. If any money is freed up by downsizing the survivor could have access to some of that money as long as the Trustees agree. The remainder would be placed in the Trust Fund pot.
It is very easy to set up a Protective Property Trust and it would give you peace of mind that as far as possible at least 50% of your property would be protected for your children. We will explain this in more detail and answer any questions you may have during your appointment, but please do contact us if you would like to know anything prior to making an appointment.
How a Right to Occupy Trust can also be used:
It is also quite common, where an older adult child lives with parents, for a Right to Occupy Trust to be created in the parents’ Wills. This type of Trust gives the child still living at home the right to stay in the property after both parents die, without actually owning it. The property will be in Trust, often for all the children of the deceased, so that when the trust period ends the property will be sold and the proceeds will be shared between all the siblings.
Disabled or Vulnerable Person Trust
This is a type of Discretionary Trust which is included in a Will, usually where parents have a disabled or vulnerable child. There are certain conditions which must be satisfied before this type of Trust can come into effect.
After you die, a Trust will come into being. The terms of the Trust, including the identity of the Trustees and beneficiaries, will have been specified your Will and you may also have written an ‘Expression of Wishes’ to detail your thoughts about how the Trust fund should be administered.
- A properly created Trust in a Will does not impact the beneficiary’s (i.e. the person with a disability’s) access to means tested state benefits.
- The Trustees will control the Trust fund money and property, so the person with a disability will not be able to squander it. Nor will it be possible for another person to take advantage of his or her naivety in relation to financial matters.
- You choose the Trustees – so it is you, rather than the Court of Protection, who decides on the identity of the person (or people) managing the money intended for the person with a learning disability.
Would you like to know more about Trusts and how they can help you and your loved ones? A.R.K. Lasting Powers & Wills is based in Stevenage and can help people throughout north and mid-Herts. Call us for a no-obligation chat. We’re here to help.
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