Ellis Bates Financial Advisers
Setting up a TrustYou can establish a trust or property protection trust during your lifetime or, through your Will, on your death. You can appoint trustees of your choice (this can include you and your spouse during your lifetimes) who will manage the trust on your behalf. Following your death, the trustees will act with consideration to your wishes.
The benefits of having a Trust:
You may also wish to reserve some influence over your assets for the trustees to observe after your death, for example:
Trusts can also be useful in preventing assets reaching a beneficiary facing insolvency proceedings and those making poor lifestyle choices, such as involvement in alcohol and drugs.
The Property Protection Trust (PPT) is a type of Life Interest Trust incorporated into a Will for couples living in England and Wales who jointly own the family home.
With this type of trust you can protect at least half of the value of the property to pass onto your children or chosen beneficiaries.
This involves severing yours and your partners joint ownership of a property into Tenants in Common, meaning you then own 50% each.
When one of you passes away, that 50% share is ring fenced in a trust and protected to go to your chosen beneficiaries, at the same time protecting the surviving partner’s lifetime interest in the property.
A property protection trust is an ideal solution to ensuring your children receive their inheritance from you as you would be able to state in your Will that your 50% of the property value goes to your children within the trust and this would ring fence it no matter what future relationship changes occurred.
Similarly, many couples worry that if their partner remarries after they pass away, and everything in the estate had passed to the partner, children from the first marriage or partnership could be bypassed or left out in favour of any subsequent children. Again, a property protection trust will ring fence the first children’s inheritance.
Most families are keen to pass on their family home to their loved ones but worry about the cost of care fees.
Once a share of a property has been passed to a surviving spouse or partner there is nothing to stop the entire property value from being included in a care fee assessment should the survivor require long term care in the future.
With a property protection trust the share of the first partner to pass away is ring fenced in trust.
If the surviving partner needs care, the deceased share of the property will not be assessed as part of their estate for care purposes and only the surviving share can be taken into account. This will ensure at least half the property value will be protected to pass to beneficiaries.
Vitally, this type of trust is not seen as deliberate deprivation of assets.
The Right of Residence Trust (ROR) is a form of Immediate Post-Death Interest (IPDI) Trust incorporated into a Will. The ROR allows you to give a chosen beneficiary a right to reside in a specified property either for their lifetime or for a specific time period. This beneficiary is called the occupant, they never own the property but have the right to live in it for the chosen duration or until a specified event. This can be particularly useful for a carer or partner for example, but where you want your children or other beneficiaries to ultimately inherit your property.
The Flexible Life Interest Trust (FLIT) incorporates two separate Life Interest Trusts into a Will. The first holds the main residential property (or share), much like a PPT, the second captures the residue including cash, savings, investments, rental properties etc, acting as additional ring-fencing of a PPT to assets beyond the residential property.
Discretionary or Disabled Persons Will Trust is a Trust specifically designed to protect the inheritance of vulnerable or disabled beneficiaries. It is managed by nominated trustees to protect and maintain receipt of means tested benefits, along with ensuring they receive support in managing their day to day finances or large sums of inherited monies.
It is important to seek expert legal advice on all trusts and inheritance matters.
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