Being a nation of homeowners, for most of us, our home is our most valuable asset. So why not look to protect it with a trust arranagment?
A lifetime property protection trust is a trust that is created within your lifetime, and is managed by selected trustees. It is most common that clients appoint themselves as trustees, along with closely trusted family members.
This type of trusts removes the property out of your estate and avoids incurring any Probate costs. As a by-product of this protection, the Trust can protect the full value of the property from care home fees, as it is owned by the Trustees and not in your name. Detailed below are some of the other benefits of the Lifetime Trust.
Second Death Planning – Will Trusts only protect upon 1st death, versus the 1st & 2nd death planning the lifetime trust allows. For example, second marriage syndrome – Upon second death, the deceased person ensures their share of the asset is left to who they wish and not to a potential new spouse and their family. This could apply to you if you were to re-marry, ensuring that the property is protected for your intended beneficiaries. Thus avoiding sideways disinheritance.
Probate Fees – Avoids cost of probate on the property as the trust falls outside of the Will, ensuring that the property passes to your intended beneficiaries without having to go through probate.
Loss of Capacity – The assets are controlled by the trustees, who dispose of or manage the assets.
Inheritance Act Claims – The assets are out of reach of any claims under the Inheritance (Provision for Dependants) Act 1975 (after 6 years). So if you are wanting to exclude somebody from your estate, they cannot make a claim against the property.
Protection & Flexibility of Inheritances – Trustees have control of management and distribution of the assets. i.e. beneficiaries maybe about to be divorced or made bankrupt etc. This flexibility is very useful and gives control and protection of the assets and ensures that the assets are disposed of at the discretion of the trustees, based on the circumstances of the beneficiaries at the time (i.e. divorce, bankruptcy, receipt of state benefits, IHT issues themselves, etc). The same applies to any vulnerable beneficiaries who are unable to manage their finances.
As at April 2024, the average property prices for property in the UK is around £281,000.00. Protecting this asset should be an important consideration for us all.