At TLB Planning Ltd, we know from experience that the most important thing people want to leave in their Will, is their home; however, in many circumstances, leaving a large asset in your Will can cause problems for your beneficiaries.
Many people worry about losing their homes, causing them to make ill-advised decisions, such as handing over their properties to their children during their lifetime. This is something we strongly recommend you do not do, as once you have given your home away, you have lost control over it. If your children were to divorce, become bankrupt or die, the security of your home would be under threat.
You may wish to write a child out of your Will. Unless it is done correctly, they could contest your Will and would have every chance of bringing a successful claim against your estate following your death, meaning your chosen beneficiaries could lose out.
Most of us don’t know when we are going to die and sometimes, it might be that your children do not want to inherit at that particular time, perhaps because they are going through a messy divorce, or that by leaving them a lump sum of money, you may inadvertently cause your children an inheritance tax issue of their own or they could potentially lose all their means tested benefits.
At TLB Planning, our Home Protection Scheme allows you to remain in your own home for the rest of your life, whilst fully protecting it from all these threats.
A Home Protection Trust is a type of ‘safe’ which is designed to protect your home and savings, against any risks that could happen in years to come.
Because the law dictates that the assets are held by the Trust rather than you directly (the trust holds the assets on your behalf), you are protected against anything that may endanger the security of your home or savings in years to come. You still have complete control and can move, sell or invest as before.
By transferring your home and assets into a trust, you can continue living in the property for the rest of your life and you become the Trustee. Although the trust then owns the property, you retain all the benefits and flexibility of owning your own home, meaning you can sell the property at any time or move to a smaller property with the trust still in place. When you pass away, the property passes to the beneficiaries named in your Will.
Although you may feel you have a very robust Will in place, if you have not protected your assets during your lifetime, there may be nothing left to leave to your loved ones by the time you pass away. By transferring your assets into a trust during your lifetime, your trust will ensure that your beneficiaries benefit from your lifetime of hard work.
There are lots of other benefits too, including:
Any asset held within a Trust usually passes to the beneficiaries within 28 days of death and do not need to go through Probate;
If beneficiaries are divorcing at the time of your death and were to inherit part (or all) of your Estate, this would form part of their divorce settlement and they would lose that share;
Beneficiaries would lose State benefits if they inherited a lump sum with disabled or dependent relatives potentially losing their home if not left to them in a trust;
You may have disinherited a child for some reason, unless your assets are held in trust for six years prior to your death, they could make a claim against your Estate, and quite probably win;
Your children may have an inheritance tax (IHT) issue of their own. By leaving their inheritance in trust, it will not form part of their Estate so not attracting IHT;
If you died and your spouse remarried, everything you had worked for could pass to another family, leaving out your children. This is known as sideways disinheritance;
By placing your assets into trust during your lifetime, all these pitfalls can be avoided. It takes around 4 – 6 weeks to set up a Home Protection Trust, and once completed, you still own the assets, albeit they are protected by the trust. You can still buy and sell property, cash in or re-invest investments or change your Will at any time.
There are certain tax implications that come into play when setting up a scheme of this nature. At TLB Planning Ltd, our experienced and friendly consultants will guide you through the process, explaining any tax implications as they may arise, thereby ensuring you have a full understanding of what you are doing, before you do it. Why not call us today?
There are several key people involved in a Home Protection Scheme Trust;
Let’s be clear, you cannot protect your home specifically against care fees and by transferring the ownership to someone else, it would be classed as deliberate deprivation of assets. The Local Authority would challenge the asset transfer, and win, so in essence, there is no legal way that you can dispose of assets to avoid paying care fees.
Currently in England, anyone with assets above £23,250 and £50,000 in Wales, are unlikely to receive state help with Care Costs. This means that unless families can fund the care privately, they may have to sell your home to fund Care, however, providing you are fit and well and care is not the reason for setting up a Home Protection Trust, it may be a benefit if set up at the right time (when care isn’t foreseeable), for the right reasons and for the right people. Many people find that the assets held within a Home Protection Trust will be disregarded during care fees means assessments.
Home Protection Trusts will need to have a Trust Deed. This document will state who is responsible for looking after the assets (the Trustees), who is to benefit (the Beneficiaries) and any conditions or rules that the Trustees or Beneficiaries must adhere to. These rules are decided by you, during your lifetime.
Because trust funds are legal instruments, the law places heavy duties and a high standard of care upon Trustees. Sometimes, this can be quite time consuming and appointing a Professional Trustee would be very beneficial, both during your lifetime and following your death.
Our Professional Trustees will