Protective Property Trust
A protective property trust means that the joint tenancy of the property is severed. Mr and Mrs will then own 50% of the property each, known as ‘Tenants in Common’.
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Why set up a Property Trust?
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Most people own their property jointly known as Joint Tenants, meaning that typically the house passes to their spouse on first death and to their children or beneficiaries on second death.
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A Protective Property Trust is created whilst both partners are still alive. The joint tenancy of the property is severed, meaning that both parties will then own 50% of the property each, known as ‘Tenants in Common’.
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Following this procedure, we will then create a new Will with the property trust written into the Will, which means that upon first death, instead of leaving the share of the property to the surviving spouse, their half will be held in trust for the beneficiaries (usually the children) of the Will. Should they go into care, the Local Authority can only means-test the other 50% of the property value. The surviving spouse has a ‘life interest’ or ‘right of occupancy’ and can live in the property for the rest of their life or substitute it for another one.
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If the surviving partner then remarries, the deceased’s part of the Will cannot be changed, thereby protecting the beneficiaries’ inheritance by preventing the deceased’s share passing to a new family, which is known as Sideways Disinheritance.
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Other reasons that a PPT may be used.
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1. Rights of occupation
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Rights of Occupation allow you to ensure that your spouse / partner is able to remain in your property after your death, even though they may not be the ultimate beneficiary. This is useful in the instance of a remarriage, where you leave your property to your children but wish for your new spouse to be able to remain living in it, or to protect a child who is still living at home. It can also be used when the spouse/partner owns the property in their sole name.
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Rights of Occupation can be put in place for whatever duration you choose – whether it be a set amount of time, indefinitely, or under certain conditions such as until remarriage or cohabitation.
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2. Care costs
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A major concern for many people is that their home may be used to fund Care costs in later life. This may happen even if you have just made a simple mirror Will.
On first death, your home will default to the surviving partner. If the survivor then goes into Care and no other assets are available to fund Care costs, the Local Authority will means-test 100% of the property value and may request the sale of this property to pay for the costs of your care.
A Protective Property Trust (PPT) can help you protect your share of the home and ensure that it is passed on to the people you care about.