Property Protection Trust
A UK Property Protection Trust is a legal arrangement designed to protect a portion of your property, typically your home, for the benefit of specific beneficiaries, usually your children. Here’s a breakdown of how it works and its purpose:
Joint Ownership of Property
It’s commonly used by couples who own their home jointly. Upon the death of the first partner, their share of the property is placed into the trust.
Right to Reside
The surviving partner retains the right to live in the property for the rest of their life. They can also move and downsize, with the trust still applying to the new property.
Protection of Assets
The trust protects the deceased partner’s share of the property from being used for the surviving partner’s expenses, such as care costs, or from claims by creditors.
Inheritance Assurance
It ensures that the deceased partner’s share of the property eventually passes to their chosen beneficiaries (commonly their children) after the surviving partner’s death. This is particularly useful in blended families to protect the inheritance rights of children from previous relationships.
Avoidance of Sideways Disinheritance
The trust helps prevent ‘sideways disinheritance’, where assets unintentionally end up with someone outside the immediate family (e.g., if the surviving partner remarries and then leaves the entire estate to their new spouse).
Here are a few key reasons why Will writing is essential:
Preservation of Assets
By implementing a Property Protection Trust, an individual can safeguard their share of a property from being utilised to meet long-term care expenses. This approach is designed to ensure that the intended beneficiaries, such as children or other loved ones, receive the property or its equivalent value as intended.
Inheritance Tax Planning
Employing a Property Protection Trust can function as a tactic to reduce inheritance tax liabilities. When a segment of the property is placed into the trust, the value of that share is effectively removed from the individual’s estate, providing the opportunity to mitigate the inheritance tax burden on the estate.
Flexibility and Control
The person initiating the trust, known as the settlor, possesses the right to stipulate the terms and conditions governing the operation of the trust. This includes identifying beneficiaries and establishing guidelines for the management and distribution of the property. During their lifetime, the settlor maintains control over their share of the property, ensuring its protection and specifying the desired distribution after their passing.
Protection against Remarriage
A Property Protection Trust is designed to hinder the surviving spouse or partner from engaging in a new marriage and diverting the value of the property to another spouse or their heirs. This precautionary measure aims to ensure that the intended beneficiaries, as specified by the settlor, such as children from a prior relationship, can receive benefits from the property as intended.
Professional Trustee Services
It is a common practice to appoint either a professional trustee or a trustworthy individual to supervise the administration of the Property Protection Trust. The trustee assumes the responsibility of ensuring compliance with the trust’s terms, while also handling the property and any related income for the benefit of the beneficiaries.
Here are a few key reasons why will writing is essential:
Preservation of Assets
By implementing a Property Protection Trust, an individual can safeguard their share of a property from being utilised to meet long-term care expenses. This approach is designed to ensure that the intended beneficiaries, such as children or other loved ones, receive the property or its equivalent value as intended.
Inheritance Tax Planning
Employing a Property Protection Trust can function as a tactic to reduce inheritance tax liabilities. When a segment of the property is placed into the trust, the value of that share is effectively removed from the individual’s estate, providing the opportunity to mitigate the inheritance tax burden on the estate.
Flexibility and Control
The person initiating the trust, known as the settlor, possesses the right to stipulate the terms and conditions governing the operation of the trust. This includes identifying beneficiaries and establishing guidelines for the management and distribution of the property. During their lifetime, the settlor maintains control over their share of the property, ensuring its protection and specifying the desired distribution after their passing.
Protection against Remarriage
The person initiating the trust, known as the settlor, possesses the right to stipulate the terms and conditions governing the operation of the trust. This includes identifying beneficiaries and establishing guidelines for the management and distribution of the property. During their lifetime, the settlor maintains control over their share of the property, ensuring its protection and specifying the desired distribution after their passing.
Professional Trustee Services
It is a common practice to appoint either a professional trustee or a trustworthy individual to supervise the administration of the Property Protection Trust. The trustee assumes the responsibility of ensuring compliance with the trust’s terms, while also handling the property and any related income for the benefit of the beneficiaries.
It’s crucial to recognise that the regulations governing Property Protection Trusts can be intricate, and their efficacy may be subject to variations based on individual circumstances and legal modifications. As such, seeking professional advice from a qualified estate planning specialist or solicitor is recommended, as they can offer personalised guidance aligned with your specific needs and goals.
At Regal Wills, our assistance in crafting a Property Protection Trust as part of your estate planning endeavors aims to provide peace of mind by safeguarding your assets and ensuring their distribution aligns with your specified wishes.
Contact us today to schedule a FREE consultation and take the first step toward securing your future and providing for your loved ones when the inevitable happens. Our dedicated team are here to assist you with all your Will writing & estate planning needs.
