Property Trusts Wills - Protect your Home against Nursing Home Fees
People often write a Will leaving everything to each other and then to their children or other heirs. Which is fine unless your spouse or partner remarries after your demise or moves into a Nursing Home.
If your spouse does remarry, their new husband or wife automatically becomes their next of kin and your children or other heirs may get nothing.
If they move into a Nursing Home then they may be asked to sell your property to pay for their fees.
Each year thousands of people are forced to sell their homes to pay for Nursing Home Fees. If you haven’t already, then we recommend you seriously consider a Property Trust Will to protect your share of your house for your children or other heirs.
We can make a new Will, or change your existing one, to include clauses which leave your share in your house to your children or other beneficiaries. We will also include full protection for your spouse or partner to live in the house after you pass on.
To achieve this, we will most probably have to make changes in the way you own your property, with the Land Registry if your property is registered, or we will need to create a “Declaration of Trust” to go with your deeds.
Unfortunately, you can only do this whilst you are both alive, so you should deal with it as soon as possible.
The costs involved are generally less than the charge for one week in a care home and if you are an existing client, you will be entitled to discounted legal work.
If your estate comprises of property and money then a Discretionary Trust may be an alternative option and is explained here;
For married couples (or those in a civil partnership) – If your estate is comprised of more than one property, or you have savings or investments you wish to protect, then a Discretionary Trust may be a better option than a Property Trust.
A Discretionary Trust in your Will states that all of your assets (property and money), up to the Inheritance Tax limit, passes into a Trust Fund for the benefit your chosen beneficiaries which could be your spouse, children, grandchildren or other heirs.
Dealing with a Discretionary Trust; Once you have passed on, the beneficiaries have two options
1. Your share of the property and money up to the Inheritance Tax limit is placed in the Trust. Your spouse or beneficiaries can continue to live in the house and use the money as required. If your spouse then goes into care or remarries your Trust Fund is protected for your beneficiaries.
2. Your share of the property and money up to the inheritance tax limit is transferred to your spouse in return for an IOU for the value of your proprty and money
spouse signs an IOU Everything you own is passed to your spouse who signes an IOU. This way your spouse has control over the estate, but the Trustees have the authority to“call in” the IOU in the event that your spouse is going into care, or decides to remarry.
Either way your house and money are protected for your chosen beneficiaries.
Unmarried Couples - can utilise a Discretionary Trust to reduce Inheritance Tax. Imagine for a moment you have a total estate of £500,000 and are living with your partner and children. If you leave everything to your partner the tax is worked out as follows; £500,000, minus your current allowance of £325,000 = £175,000 taxed @ 40% = £70,000 tax. When your partner passes away leaving the remaining £430,000 to your children, there will be a further £42,000 tax.
If instead, you leave directions to place £325,000 into a Discretionary Trust on your demise, your partner can benefit from it, but it will not form part of their estate, so it will save your children £42,000 – the second tax bill.
So a Discretionary Trust provides the same protection as a Property Trust but allows more flexibility for the survivor and is also useful for Inheritance Tax and to protect estates for the disabled.