What can Wills Trusts protect against?
In the most part writing your Will is a piece of cake.
You know what your assets are and you probably already know who you want to leave them to. Pop it all down in your Will and then when the time comes it’s all taken care of. But, what about protecting your share of JOINTLY owned assets? That’s where Wills Trusts come in.
Joint ownership works like this…
You both own 100% of whatever it is. Then, on first passing, the rules of succession dictate that the surviving partner automatically becomes the sole owner. You may, of course want this to happen which is great, nice and simple all round. But, some consideration should be given to the risks of allowing ownership to just simply pass along, including the sideways disinheritance of your children and your share of any asset being used to pay the care fees of your surviving partner AND potentially even their new spouse.
Can you protect your share?
The good news is you can and, it’s relatively straightforward. You just need to split the ownership of your property – severing the tenancy, and put your half into a trust. By doing this you can now both actually own your part of the asset, in your own name. On death the survivor can be granted the ‘right to reside’ or ‘right to occupy’ in the property for a fixed term, until remarriage, for life, or until they go into care, which ever comes first! They are usually permitted to downsize if they wish and you can even let them draw an income from the profits if you’re feeling really generous. BUT, it must eventually pass to the beneficiaries you have specified in your Will.
What are the benefits of a Wills Trust?
If you and your partner are Joint Tenants whoever goes first gets control of the asset in it’s entirety. They are then at liberty to dispose of it as they wish. By becoming Tenants in Common and splitting ownership things become more secure if YOU go first. YOU get to choose who inherits your share of the assets, protecting them against paying for your partners care of from being given to people you would not have chosen.
What can Wills Trusts protect against?
The sideways or accidental disinheritance risk
As a couple you’ve probably made “mirror” Wills. Leaving everything to each other on the understanding that on second passing your assets will go to jointly agreed beneficiaries.
But, no matter how well-made your plans or how good your intentions there are certain events that will automatically overtake the situation. Say the surviving partner remarries and they haven’t made a new Will. EVERYTHING will then go straight to their new spouse and/or any children they might have had together. Totally side-stepping the children you had during your time together and intentionally, or not, disinheriting them. We are seeing more and more cases of sideways disinherited children contesting Wills its costly, messy and totally avoidable with a simple Will Trust.
Trusts and care fees
You may have heard about people, in a bid to avoid paying care home fees, placing their properties in their entirety into Trust. Unfortunately as far as your local authority is concerned these kind of ‘whole asset’ trusts are not worth the paper they are written on. They will consider this as a deliberate deprivation of assets and take it anyway, so a costly and futile exercise – read more about that here. That said however, a very useful effect of severing the tenancy and establishing a trust over the property and/or other assets is that the share in trust cannot be taken into account by a local authority if the survivor goes in to care at a later date. While this will protect half of the assets if the survivor enters care, the whole property could be taken into account if you both enter residential accommodation.
Wills Trusts are not just for jointly owned assets. If you want someone to benefit from an asset (perhaps by living in your home after your death or getting the income from an asset) but don’t want them to own it outright or be able to sell it, then your Will can contain a ‘term interest’, ‘life interest’ or ‘discretionary trust’. You can give directions about who the asset eventually passes to and when.
If one or more of your potential beneficiaries is disabled a ‘disabled person’s interest trust’ (vulnerable beneficiary trust from April 2013) can be established which has certain tax advantages and can protect any means-tested benefits they are in receipt of.
Who should consider Will Trusts?
People with children from previous marriages or who find themselves in higher risk situations be it through their job or a weekend adrenalin junky! Those with a family history of mental health problems or cancer. People with substantial savings they want to ensure pass to their chosen beneficiaries or just those concerned with threats to their estate in general should all consider a Will trusts.
Future Legal Services offer a number of different Trust options tailored to suit your personal situation and requirements. AND, you can include one or more Trust in your Will for a flat fee of just £199. Contact us today for a no-obligation consultation with out in house Trusts specialist.