Protect Your Home from Care Fees in Bedford & St Neots

If you are looking at options to protect your home from being sold to pay for care fees then you will be interested in a Protective Property Trust. This trust is for couples who own property jointly, with the trust being put the will. It can only be created whilst both partners are alive. Normally the property is divided 50/50, but it can be different. 

The aim of the trust is for the surviving spouse to be able to continue living in the family home, meaning the deceased’s share of the property is kept separate. Others, most commonly children or loved ones can also then inherit after the surviving spouse’s death.

Concern about losing your home for care fees is common. Here’s a story about what can be done.

Meet John & Ethel

My name is Ethel, I am 84

My neighbour John and I lived next door to each other in the same street for over 50 years, we now live in the same care home. I like John, but he winds me up! Why?

Because I had to sell my house to pay the £850 a week to live here, while he spent his money down the pub, and because he has no savings the local authority pays nearly everything for him, it does annoy me that my children have lost out on their inheritance.

My name is John, I am 82

I really like Ethel, we now live in the same care home, eat the same food, and sit next to each other in the day room, I keep telling her, she should have spent her money while she had the chance.

I know it makes her mad, but sometimes I cannot resist a little wind up. I admit, I did waste my money and did not bother to provide for myself but as it turns out I get nearly everything paid for me.

What Can You Do?

Make Wills that work for you, ‘Protective Property Trust‘ Wills can help.

What is a Protective Property Trust Will?

These Wills come as a pair, either mirrored or with different content, they nevertheless are designed to help protect your property from an assessment to long term care fees. The half share of the family home belonging to the first person to die passes into the trust. This type of trust is also known as a ‘life interest trust’ in favour of the survivor which means that they can benefit from the share of the house in the trust during his/her lifetime. On their death, the trust fund passes to others, usually children of the family.

How do these Wills work?

Both members of the couple make a will leaving their share of the property into a property protective trust set up in the will, you should be aware that the Property Trust Wills can only be created whilst both partners remain alive. Normally with couples the property is divided 50/50, though these percentages can be different. Upon the first death, their share of the property is placed into the Trust to be administered by the Trustees.

What happens to the title deeds?

When you make your wills, you must make sure that the family home is owned in your joint names as tenants in common. After death, the legal title should be transferred into the joint names of the surviving spouse and the trustees (these are usually the same persons as your executors). The surviving partner can be one of the trustees.

Who controls the trust?

The trustees control the trust. The trustees will usually be the surviving partner and at least one other person, although the survivor’s right of occupation is protected.

Can the trustees evict the surviving spouse?

The trustees control the trust. The trustees will usually be the surviving partner and at least one other person, although the survivor’s right of occupation is protected.

What are the inheritance tax implications?

There are no adverse inheritance tax implications.

What happens if the surviving spouse needs to move into residential care?

The value of the half share of the property in the trust is a disregarded asset for the purpose of financial assessment by a Local Authority. The half share belonging to the surviving spouse is a capital asset of the surviving spouse and so may be subject to assessment.

Isn’t it easier if we simply give half of the property to our children when one of us dies?

It might seem more straightforward. However, you are vulnerable should any of your children become bankrupt, get divorced or die during your lifetime? If any of these events occurred, a sale of the property could be forced to make the child’s share of the property available to his/her creditors, the court or his/her executors. Or, you might simply fall out with your children, and they could request that the property be sold so that they can receive their share of the cash proceeds of the sale. If a half share of the property is owned outright by the children, when the surviving spouse dies, and the property is sold, the children may be exposed to capital gains tax on their share of the property if it has increased in value from the date of the gift if it is not their residence. There will not be any capital gains tax liability on the share of the property held by the trust since the trustees can claim principal private residence relief as a result of the surviving partner’s right to occupy.

What if the surviving spouse wants to move house?

This is not a problem. The family home can be sold, and an alternative property purchased. If the property which is purchased costs less than the original property, any profit would need to be shared equally between the surviving spouse and the trustees.

What if we change our minds?

Since the trust does not come into existence until the first spouse dies, you can simply change your will(s) before this time.

For a FREE, no obligation Protective Property Trust consultation get in touch

Your consultation is arranged at your convenience in your home within the Bedford and St Neots area, and further afield in the UK we can arrange an initial consultation for you by telephone.