For many of us, the most valuable asset that we will own during the course of our lifetime will be the property that we live in. Understandably, therefore, this is the asset that we will want to protect, both from future care home fees, as well as from any second marriage or civil partnership, where a surviving spouse or civil partner remarries upon the death of the other. Below we look at how a Property Trust Will can help in either scenario.
Property Trust Wills and care home fees
Jointly-owned property is disregarded from any residential care needs assessment, at least for as long as any spouse or civil partner remains living in it. However, once a person passes away — and property is left to the surviving spouse or civil partner under the terms of a Will or in accordance with the rules of intestacy — the deceased’s share of the family home can be factored into any financial assessment for the surviving spouse or partner.
At present, if a person enters into full-time residential care in England and Northern Ireland, and they have any savings or assets worth more than the £23,250 threshold then, generally speaking, they will have to pay the cost of care themselves. Even though the government has announced a care-costs cap of £86,000 as from October 2023, providing financial protection from unlimited care costs if these reforms come into force, the matrimonial or partnership home may still need to be sold to pay for care home fees.
A Property Trust Will, also known as an Asset Protection Trust Will, provides an effective legal mechanism for couples to ensure that on the death of the first, their share in the property will not be factored into any financial assessment if they need to go into care in the future. This will therefore avoid the full impact of care home fees and help to safeguard any inheritance for the couple’s children as far as possible.
Property Trust Wills and second marriages
Similarly, when it comes to second marriages, if a couple make Wills leaving their assets to each other on the first death, and to their children or other family members on the second death, the surviving spouse of civil partner will still ultimately own all of the combined assets. The problem with this is that the survivor is free to change their Will at any time, potentially leaving the first party's chosen beneficiaries completely cut off.
The survivor could also remarry, which means that their Will would automatically be revoked and, again, the chosen beneficiaries of the first person to die will lose out.
A Property Trust Will can ensure that assets are received by the beneficiaries as chosen by a couple from the outset, regardless of who dies first, where this type of trust mechanism can be extremely useful where a couple have children from previous relationships.
How does a Property Trust Will work?
A trust is basically a legal arrangement which, in the case of a Property Trust Will, is typically a life interest trust included within a Last Will and Testament. This is where a surviving spouse or civil partner can continue to occupy the family home for as long as they need to, before the property passes on to the next generation. The survivor will be able to benefit from the deceased’s share of the property, without actually owning that share, with the property passing to specified beneficiaries when their interest comes to an end.
The advantage of a Property Trust Will is that if the survivor needs full-time care, only their own share of the family home can be assessed towards residential care fees. This is because they do not own the deceased’s share, but simply have a life interest to use it. Equally, they cannot bequeath that share to someone else, nor can that share form part of the marital or partnership assets if they choose to re-marry or enter into another civil partnership.
However, Property Trust Wills are a very specialised area of law, where it is essential that professional advice is sought to ensure that a couple’s wishes are met.
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions. Before acting on any of the information contained herein, expert advice should be sought.
