A Protective Property Trust is a practical and powerful way to ensure that your home remains in your family and that your children inherit what you intend for them. It offers peace of mind by safeguarding your assets, especially in situations where unforeseen circumstances, such as care needs or remarriage, could otherwise erode your estate. In this article, we’ll explore how this type of trust works and address common questions you may have.

How Does a Protective Property Trust Work?

When you establish a Protective Property Trust, your share of the property is placed into the trust upon your death. This ensures that your share is protected and will eventually pass to your chosen beneficiaries, typically your children, while allowing your surviving spouse or partner to continue living in the property for as long as they need.

The trust is commonly set up in a Will, and the process begins by severing the joint ownership of your home, if applicable, to hold it as tenants in common. This means each owner holds a distinct share of the property (usually 50%), which can be individually managed and passed on.

Once the trust is in place, it provides long-term protection for your share of the property, ensuring it isn’t at risk of being lost due to remarriage, creditors, or care home fees for the surviving partner.

I’m Not Sure Whether We Own Our Property as Joint Tenants or Tenants in Common?

This is a crucial question because the structure of ownership affects how your property can be handled in a trust.

• Joint Tenants: If you own your property as joint tenants, both owners own the property as a whole, and the surviving partner automatically inherits the entire property upon the other’s death. This automatic transfer bypasses the terms of a Will, which means a Protective Property Trust cannot be applied in this scenario.
• Tenants in Common: If you own your property as tenants in common, each owner has a defined share. This allows you to leave your share of the property to someone else in your Will, making it suitable for use in a Protective Property Trust.

If you’re unsure about your ownership status, it’s easy to check through the Land Registry. You can also consult a solicitor, who can guide you in converting joint tenancy to tenants in common if needed.

What Rights Will My Spouse or Partner Have?

A Protective Property Trust is designed to balance protection for your children with the needs of your surviving spouse or partner. They will have the right to live in the property for the rest of their life or until they choose to move. In some cases, the trust can even allow them to downsize and transfer the value to a new property, ensuring they maintain stability and comfort.

While your spouse doesn’t own your share of the property outright, the trust ensures they have secure living arrangements without compromising the inheritance you intend for your children.

Isn’t It Simpler to Just Leave Half of Our House to Our Children in Our Wills?

While leaving half of the house directly to your children may seem straightforward, it comes with significant risks. For example:

• If your children inherit part of the property while your spouse is still alive, it could create complications if your spouse wishes to sell or move.
• Your children’s share may be at risk if they experience financial difficulties, divorce, or other life challenges.
• Without a trust, there’s no protection against the entire property being used to cover care home fees, leaving nothing for your children.

A Protective Property Trust avoids these pitfalls by ensuring your share is preserved for your children while granting your spouse the right to live in or benefit from the property.

What Happens If My Spouse or Partner Needs Care?

One of the greatest benefits of a Protective Property Trust is its ability to protect your share of the property from being used to cover care home fees. If your surviving spouse or partner needs care, only their share of the property may be considered for means testing.

Because your share is held in trust, it cannot be included in their financial assessment. This means your children’s inheritance remains safeguarded, even in the face of significant care costs.

Who Can Be My Trustees?

Trustees are the individuals or entities responsible for managing the trust. When choosing trustees, it’s important to select people you trust implicitly to act in the best interests of your beneficiaries.

Common choices for trustees include:

• Family members, such as adult children or siblings.
• Close friends with financial or legal acumen.
• Professional advisers, such as solicitors or accountants.

It’s wise to appoint more than one trustee to ensure decisions are balanced and fair. Most people choose two or three trustees for this purpose.

What Do Trustees Do?

Trustees have a legal duty to manage the trust according to its terms and in the best interests of the beneficiaries. Their responsibilities may include:

• Ensuring the surviving spouse has access to the property as intended.
• Making decisions about selling or transferring the property if circumstances change.
• Distributing the property to the ultimate beneficiaries (e.g., your children) when the trust ends.

Trustees must act impartially and with integrity, so it’s essential to choose individuals who are reliable and capable of managing these responsibilities.

A Protective Property Trust offers a robust and flexible way to ensure your children’s inheritance is secure, while still caring for your surviving spouse or partner. By protecting your share of the property, the trust provides peace of mind that your hard-earned assets will pass to your loved ones as intended.

If you’re considering setting up a Protective Property Trust, it’s a good idea to seek expert advice. A solicitor or estate planning professional can guide you through the process, ensuring your trust is tailored to meet your family’s needs and future goals.

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