Property Trust or Protective Property Trust Wills are helpful in many circumstances, and certainly, far more people should have them than do. But they are not for everyone.
So how is a protective property trust set up?
It may sound a bit odd, but your home is divided into (normally) two equal shares. So typically, each partner owns half of the property. Then Property Trust Wills are set up, giving each partner the right to reside in the home (or replacement home – often for life – if the other partner dies.
How does this help?
In effect, if one partner gets into financial difficulties (apart from on any joint matters such as a mortgage), the other partners share of the property cannot under normal circumstances be used to pay the debt.
How does this affect care fees?
Care fees are only one of many issues which make property trust wills a useful tool in the majority of peoples legal planning. It is usual for a property to be left out of calculations for care fee contributions if a co-owner or dependent under 16 or over 60 lives in the home.
But what happens when the healthy home owner dies? In the overwhelming majority of cases, the total value of the home becomes available to pay for the care fees of the surviving partner who is in care. Result: FAMILY inheritance cut – perhaps to nothing – CARE FEES take priority. At least with PPT (Property Trust) Wills, control is left with the family for half of the home – unless both owners end up in care. But even then, there is more protection than there would be without the protective property trusts Wills being in place.
How do costs compare between protective property trust Wills and Full Property Trusts?
Setting up PPT Wills (sorry, trade jargon!) is much cheaper than setting up full lifetime trusts. Nothing further needs to be done until one of the parties dies, but then Probate will be required, and it might not have been otherwise. That then sets up the equivalent of the Lifetime Trust for the deceased partners share. By now you will probably have paid out as much as the cost of a full Lifetime Property Trust, but have virtually no protection on the survivors share.
Surely Full Property Trusts have some disadvantages?
Yes they do
* the initial outlay is more.
* The trustees you appoint (which will usually include one of you on each trust) should have a book in which to note down every year what issues have been considered, and what action has been taken – even if it is none.
* The buildings insurance needs to list the trustees interests as well as those of the now “former” owners. Some companies don’t understand, but many major ones are fine.
*If you need to move, then all the trustees need to sign the paperwork, which they are duty-bound to do as you are the prime beneficiaries.