Will Trusts are used to protect assets so they are passed down to your family and the assets are not affected by remarriage, inheritance tax and care fees.
Will Trusts and long-term care
If you use a Will Trust and your partner dies, you, as the surviving spouse, retain a right to live in the house. If you need to move into residential care, only your share is assessed by the local authority. The part owned by the trust is not counted. In this way it is protected from care home costs. Government rules (Charging for Residential Accommodation Guide) suggest that this arrangement will not be contested as ‘deliberate deprivation’, meaning that you have deliberately split your assets to avoid paying high care home fees.
Will Trusts and inheritance
Another reason for setting up a Will Trust is to avoid ‘sideways disinheritance’. This occurs when the first partner dies, leaving children from the marriage who might reasonably expect to inherit some of the family estate in due course.
If the surviving partner remarries and fails to make provision for their children in a new will, there’s a risk that everything will go to their new spouse instead.
Lifetime Trusts are often known as property protection trusts or asset protection trusts.
Unlike Will Trusts, which come into being on death, Lifetime Trusts are established straight away. Your home is gifted to the trust, which allows you to carry on living in it.
Will Trusts and Lifetime Trusts can be either fixed interest (where the first beneficiary has an absolute right to occupy the house and receive the income from any trust investments) or discretionary (where the trustees have a pool of potential beneficiaries and have a discretion on how to benefit any of the potential beneficiaries).
Thomas and Cooper Legal Services can provide trusts to clients in Shepshed, Coalville, Ellistown and across the rest of Leicestershire and Derbyshire. Please contact us for further details.