Protecting the home?

Life Interest Trusts – Protecting the Home

Including a trust in your Will may seem like an expensive and complex option.  However, they can be a great tool for individuals to provide protection over their assets and ensure that these assets are protected for their future beneficiaries.

One option to consider is a Life Interest Trust.

A Life Interest is a type of trust that can be included in your Will that provides an individual the right to benefit and enjoy the trust asset, usually a property, for the rest of their lifetime. This person is call the Life Tenant. On the death of the Life Tenant the trust asset then passes to the ultimate beneficiaries. These beneficiaries are referred to as the Remaindermen.

Having a trust in place over certain assets, such as the family home, can offer protection in the event of remarriage and care home fee planning.

Below are some scenarios for why you might want to consider a Life Interest Trust.

Remarriage

A Life Interest Trust can provide protection for children from earlier marriages/relationships or to ensure that if your spouse or partner remarries, after your passing, assets do not end up with their new spouse or partner, or children from that new relationship. Everyone has freedom to choose who benefits from their estate in the event of their death. If you and your partner make a Will leaving everything to each other, there is no guarantee that your partner will keep their Will the same after you die.

Care Home Planning

You may not be concerned about care home fees whilst you are young and healthy but the cost of care has shot up over the years and as it stands the government will step in to assist you with funding when your capital, which includes your savings and any property you own, falls below the threshold of £23,250. Privately arranged care can cost over £1,200 per week in some cases. The prospect is a worrying concern for families which may result in assets being wiped out by the cost of care, leaving nothing to be inherited by your family or chosen beneficiaries.

Solution

If you co-own a property or want to protect a solely owned asset you could place that asset within a Life Interest Trust within your Will. This is to ensure that there is something left for your children in the event that you or your spouse or partner remarry or go into care in the future.

Our Wills, Trusts and Estates Team can assist with providing full advice regarding the above alongside the preparation of a Will or a Will review to ensure that the document still reflects your wishes, and is also tax efficient.

For further information please visit our website dfalaw.co.uk, email us here or call us on 01604 609560.