When making a Will with your spouse or partner, itâ€™s worth thinking about what will happen should you need to go into a care home in the future. Each local authority abides by the rules of the CRAG report on how care is paid for and who pays for it in different ways.
According to Lancashire County Council, the average cost of care with nursing in the North West for one year is Â£35,500. This goes up to Â£147,500 over four years. Of course, this number varies depending on the home you choose, the level of care required, and where it is located. If you, or a member of your family, need to go into a care home, the local authority will assess how much you or your family need to pay, based on the value of the assets and savings of the person going into care.
What is a Property Protection Trust Will?
A Property Protection Trust Will is a trust designed to protect half of your property from the assessment for long term care fees. If you are a couple and own your home together, and choose to have a Property Protection Trust, then the half share of the first person to pass away will go into a trust. A property protection trust is also known as a life interest trust, in favour of the surviving partner. This means they have the right of occupation in the property for their lifetime. On the surviving partner’s death, the trust ends and is passed on to the named beneficiaries â€“ usually the children.
How does a Property Protection Trust protect my home from being swallowed up by care fees?
The half of the house that falls into the Property Protection Trust, when the first half of the couple dies, is excluded from being assessed as capital to pay for the surviving partnerâ€™s care fees, should they need long term care. The half belonging to the surviving partner can be assessed by the local authority and can be used to pay for their care needs. The Property Protection Trust will ensure that at least half the house will pass on to the children (or the named beneficiaries).
Who is a property protection trust for?
A Property Protection Trust is a Will for couples, who may think that one of them might need long-term care at some point in the future. The couple will need to own their property as Tenants in Common. If own your house as Joint Tenants it can easily be changed to Tenants in Common with the help of a solicitor. Most married couples own their properties as Joint Tenants.
Will the trust be liable for inheritance tax?
There are no adverse Inheritance Tax implications, nor will the property be liable for any Capital Gains Tax if it is sold once it has passed to the beneficiaries.
Why donâ€™t I just give half the house to the children when one of us dies?
Passing on half of the house that belonged to your partner, after their death, to your children is not as simple as it may seem and cannot be done if the property is in joint names. If you fall out with your child or they become bankrupt, divorced or die in your lifetime, a sale of the house could be forced by the courts to meet their obligations to their ex-spouse, creditors or will executors. The property will also be liable for Capital Gains Tax if sold.
When 50% of a house is in a Property Protection Trust, it is not possible to force a sale as the surviving partner has a legal right to occupy the house for their lifetime. Also, any beneficiaries will not have to pay any Capital Gains Tax if they sell the property after you pass away.
What if we change our minds?
A Property Protection Trust will only come into effect when the first partner dies. Up until then, you can simply change your Will.
Can I move house once my partner dies?
Yes, you can move home once your partner dies and purchases another property. Any profits made from the property sale will need to be shared equally between the surviving spouse and trustees.
How can Barber & Co help?
At Barber & Co we have a number of expert Will solicitors in Preston, who can help you set up a Property Protective Trust Will and advise you on any other estate planning matters. We have offices in Preston, Ramsbottom and Darwen. Contact us today!