Property protection trusts can be created as part of a will and allow a beneficiary to benefit from the deceased’s estate as if they owned an asset, without actually inheriting it. Although not recognised as a legal term, a property protection trust mechanism serves as a standard trust in which a beneficiary enjoys a life interest.
What Are the Benefits of Having a Property Protection Trust?
Crucially, having a property protection trust in place can minimise the estate’s value for the beneficiary. Furthermore, if an individual leaves their property to a trust, this trust can award the surviving partner the right to live in the shared property for as long as they wish. Should they need care at a later date, they may not be required to pay as much for it, as their partner left their half of the property to a trust.
Professionals such as James Scotney, Town and Country Law director, know that property protection trusts can also be beneficial in cases where a surviving partner remarries. Where this happens, a trust ensures that assets go to the originally intended recipients when this partner dies, rather than to the new spouse and (if applicable) their offspring.
How to Create a Property Protection Trust
For those considering creating a property protection trust, it’s best to consult with a trained legal professional or firm, like Town and Country Law. The latter firm, incorporated in 2013, provides specialist legal services and advice around will writing and prides itself on offering a high quality, transparent service, friendly customer care, and giving clients all the facts they need to make an informed decision. Town and Country Law has its head office in Lincoln, with additional branches in King’s Lyn, Sheffield, Stamford and Uttoexeter.
Alternatives to a Property Protection Trusts
As an alternative to creating a property protection trust, an individual could give their estate to their beneficiaries during their lifetime, having secured an agreement that these beneficiaries will look after the surviving spouse. This could be a viable option as long as it is clear that an individual isn’t giving away their assets just prior to requiring care. However, there are several important things to think about for those considering this alternative, such as potential inheritance tax and capital gains tax consequences and the risk that the beneficiaries do not act in the promised manner. Furthermore, if beneficiaries divorce, the assets would be equally divided between each. For more information about property protection trusts, take a look at the embedded PDF.