Life Interest Trusts
A Property Protection Trust or Life Interest Trust can be created when a property is jointly owned. The Trust is formed by using specific clauses and terminology within your will. The object of the Trust is to protect the share of the first joint owner to die. That share is protected from interference by 3rd Parties and from assessment for care home fees. This means that that if the surviving spouse needs residential care or gets in to financial difficulty then the deceased owners share is “ring fenced” and protected by the trust and will not be assessed or at risk.
The Trust is designed to enable joint owners to be more flexible with their share of the property enabling them to pass it to some one other than their Co-Owner.
The Trust is drafted so that the surviving spouse is not restricted in their use of the property. In particular the surviving owner can sell the house if they wish and buy another with the proceeds. If there is any surplus it can be divided between the survivor and the estate of the deceased co-owner. The surviving owner has the right to live in the property for the rest of their life. The purchase of any replacement property must be subject to the terms of the Trust created in the Will.
The use of a Property Protection Trust could be by a couple getting marred or entering a Civil Partnership for a second time. In such a situation one or other of the parties may wish to protect the value of a share for the children of a previous relationship.
A further use of such Trusts is to control the level of capital and income available for the purposes of means tested benefits and care home fees.
For these Trusts to work a couple must own their home jointly as “tenants in common” This is a legal definition relating to ownership and has nothing to do with a rental tenancy. For anyone considering a Trust of this nature Kingfisher will conduct a search at the Land Registry and if necessary covert the title to “Tenants In Common” in order to ensure the Trust will work effectively.
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Contact me Graham Davies for a no obligation discussion as to how I may help you 01743 213539