Whilst having a valid Will drafted may help you to fulfil your needs, the use of one or more trusts could also prove useful to give you and your loved one additional protection against a variety of issues, including the payment of excessive inheritance tax and having to pay residential care costs.
This is something we at Andrew Douglas Wills and Legal Services can help you with throughout Essex based on your individual circumstances.
To give you an example of why you may need a trust, it is pertinent to consider one of the most popular we provide in the form of a PROTECTIVE PROPERTY TRUST due to how easily it can be included in your Will and its potential to save you thousands of pounds.
PROTECTIVE PROPERTY TRUSTS
A Protective Property Trust is based on three basic elements – (a) the basis on which you own your property, (b) the terms of the Trust, and (c) the specific Wills including the Trust instrument.
The Protective Property Trust can only be created whilst both you and your partner are alive with the property to be included as part of your Wills owned as Tenants in Common; even though it does not come into force until after you or your partner pass.
At this time you or your partner’s share of the property (usually 50%) is placed into the Trust in the Will to be administered by the nominated Trustees (usually including the surviving partner). The Will then also specifies who is to be the beneficiary of this share whilst the Trustees are duty bound to protect it for the beneficiaries.
The surviving partner has the right to remain living in the property for the rest of their life under the terms of this Trust. This is because it is only when the second partner’s dies that the Trust will come to an end so the property then passes absolutely to the beneficiaries.
However, the surviving partner does not own the deceased’s share of the property under a Protective Property Trust. This is important because if the surviving partner goes into residential care, then only their share in the property can be included to assess their contribution to their care costs.
Therefore, the deceased’s share in the property is fully protected for the beneficiaries so that, even if the surviving partner remarries, their inheritance is protected with a ‘Life Interest’ in that share and can live in the particular property for the rest of their life.
Then, if the surviving partner chooses to sell and move to another property, the sale proceeds can be used to purchase the second property which the trust will apply to. Moreover, if there is any excess capital available following a sale of a property that money may be invested elsewhere and the surviving partner can even take the interest as income.
The reason for this is that the State will only provide for those with little or no savings or assets whilst everyone else is expected to pay at least part, if not all, of their own costs.
Therefore, anyone who owns their own home is unlikely to receive any assistance even though they do not have significant cash assets. This means the Department of Social Security can place a charge against the family home to allow them to recover the money they are owed when the property is sold.
This is something we at Andrew Douglas Wills and Legal Services can help you avoid throughout Essex through the writing of your Will.