It is quite common on receiving instructions from a client that their estate, and therefore their beneficiaries, would benefit from some kind of Will Trust drafted within the body of their Last Will & Testament.
The main asset in the estate of most people is their home and for a number of reasons such as care fees, tax or securing the property from sideways inheritance, i.e. passing to those unintended, we suggest the additional drafting of a Will Trust.
A Will Trust, as mentioned, is drafted within the body of the Will itself, and as with a Will, it comes into effect on the death of the testator. This is an important point and it is essential to understand that although a legal Will can be signed and witnessed making it legally binding, the Will Trust itself is not in effect.
There a number of reasons why a Will Trust would be suitable. It is often a mechanism by which the property can be protected from creditors, local authority and in-laws. A carefully drafted Will Trust can ensure the beneficiaries inheritance is protected whilst providing security for those who jointly own the asset.
A very common form of such Trust is the Property Protection Will Trust, otherwise known as a Property Protection Trust. With this Trust the share of the property of the first spouse to pass away would be safely held in Trust, and the surviving spouse would have a ‘lifetime interest‘ in the share placed into the Trust.
This 'lifetime interest' would include a right for them to reside in the property for the remainder of their days. The surviving spouse would still hold their own share of the property and they are able to sell or move home if they wish. In this way at least half of the property is protected should the survivor require care, and it also protects the inheritance of children should the surviving spouse remarry.
Unless specified otherwise, the Executors of the Will would also double up as the Trustees. This is often adult children and since they are usually the eventual beneficiaries, it is good fit and usually provides for a smooth transition.
As mentioned the surviving spouse will have a lifetime interest in the share placed into Trust. This not only means that they have protection in the knowledge that they cannot be forced from the property, but also it is usual that any income generated would be provided to them if, for example, the property is rented out.
Such a Trust clause would also set out the responsibilities of the lifetime tenant of the share, e.g.. the surviving spouse, such as ensuring the property is insured and properly maintained. It is also possible to specify circumstances where the lifetime interest would come to an end, such as if it seized to be their main residence. It would be the responsibility of the Trustees to determine if such conditions had been triggered.
On the death of the surviving spouse or partner, it is usual that the property is sold and distributed to the beneficiaries listed in the Will Trust. In most circumstances the beneficiaries are adult children and whilst protection has been afforded through the Trust, in most circumstances it would not have caused undue administration or paperwork.
It is a very simple mechanism to protect property from care fees as only the half share of the surviving spouse can be used to pay for such care. The half held in Trust would be protected and cannot be accessed to pay for care under any circumstances. It is also true that it avoids the remarriage of the surviving spouse having the effect of disinheriting children.
Will Trusts have been around for a very long time and are an effective way of protecting assets for future generations. Rose & Trust of Bristol specialise in this form of Trust and can assist you to quickly and effectively protect your home. Contact us today to find out more.