For most people their most valuable asset is their property so understandably this is the asset most people want to protect.
There are two different ways in which a property can be owned jointly
Joint Tenants - This is when one party dies and their share automatically passes to the surviving joint owner, irrespective of what their Will states. The surviving joint owner will then own the house in full and can dispose of it however they wish during their lifetime or on their death.
Tenants in Common - This is where each party has their own separate share of the property which they can leave in their Will to whoever they wish, regardless of whether they die first or second.
There can be a number of different reasons for people to have concerns about protecting their assets. The two most common reasons are protection from care fees and protection in second marriages
Protection from Care Fees
Many people worry about what would happen if they went into a care home and fear that their home and savings would be taken away from them to pay for their care
At present, if a person enters full-time care and they have property, savings & investments worth more than £23,250 then, generally, they will have to pay the cost of their care themselves (figures correct as at 2018/2019).
More often than not when couples make Wills which leave their whole estate to each other on the first death. This means the survivor then owns everything. The problem with this is if the survivor goes into a care home all their assets, including those of the deceased, can be taken into account towards their care fees.
Asset Protection Trust Wills can ensure that your partner can still use and benefit from your assets if you die first, but if the survivor does ever need full-time care, your assets will not be used to pay for it.
It is common for a couple to make Wills leaving their estate to each other on their first death and to their children or other family on the second death.
However, this may not be suitable for couples who are in a second relationship, particularly if they have children from a previous relationship.
If a couple make Wills leaving their assets to each other on the first death, then the survivor will own all of the combined assets. The problem with this is the survivor is free to change their Will at any time and the first parties chosen beneficiaries could be cut out completely. The survivor could also remarry which would mean their Will would automatically be revoked and, again, the chosen beneficiaries of the first to die will lose out
Asset Protection Trust Wills can ensure that your assets are received by the beneficiaries you choose, regardless of who dies first.
How Asset Protection Trust Wills Work
A Trust is basically a legal arrangement, which in this case is included in your Will.
The Trustees are the people responsible for handling the Trust after your death and, in most cases, are the same people as the Executors you appoint in your Will. The Trustees can include your partner and any beneficiaries you include in your Will. There must be at least two Trustees and a maximum of four.
There are various types of Trust which can be included in Asset Protection Trust Wills. All of the options can be discussed with you to see what best suits your circumstances.
One of the most popular types of Asset Protection Trust Wills is a Life Interest Trust. This is where the survivor can use the share of their property owned by the first to die for the rest of their life, before the share passes on to the next generation. This means that the survivor can continue to occupy the family home for as long as they need to. The advantage of this is that if the survivor ever needs full-time care, only their own share of the family home can be assessed towards care fees. The share of the property of the first to die cannot be assessed towards care fees as the survivor does not own it, they only have the right to use it.
It is common for a couple to leave their cash, investments and personal possessions to each other outright and for only their property to be subject to an Asset Protection Trust Wills as doing so would have no significant impact on the survivor's day to day life or standard of living.
A Life Interest Trust Wills is extremely flexible and if they wish to do so, the survivor can decide to move to a new property and use all of the money from the sale of the property to purchase a new property which would be held on exactly the same terms.
Asset Protection is a very specialised area of law and it is essential that you take professional advice to ensure your wishes are met.
The options which best suit your needs will depend on what your assets are, your circumstances, who you wish to benefit and what worries you have. Here at Taylor Bracewell our expert team can guide you through all the different options which would suit your needs and advise you of all the advantages and disadvantages accordingly. We believe in providing you with all the information to enable you to make an informed decision.
For more information, why not download one of our helpful guides.
Alternatively, give us a call on 01302 341414 (Doncaster) and 0114 272 1884 (Sheffield) and our friendly team will be happy to have a chat with you.