Property Trusts – Perfect Or Imperfect?
Browsing “Property Trusts” this weekend, I was rather alarmed to see two pretty opposed views as to their effectiveness.
There are essential two forms of property trusts.
1) Full Property Trusts Enquire
In this version, the whole property is put into Trust so that the original owners are no longer the actual owners. Our version of this is the Legacy Home Protection Plan.
2) Protective Property Trust Wills Enquire
These are typically for couples and divide ownership into two shares. When on partner dies, the other has a lifetime right of residence in the who home. However, they only own their part. The former partners share has gone into a protective property trust, which the surviving partner should never own. (Sadly,thousands of these sorts of Will were not correctly drafter, so they won’t work. If you have one, please contact us so we can review it for you.)
Protective Property Trust Arguments
One extremely large and respected provider says “A small investment now offers complete peace of mind and protection for your loved ones.” This is in relation to Protective Property Trust Wills.
This claim is misleading for the simple reason that Protective Property Trust Wills cannot provide complete protection. They can be really useful, but success is not guaranteed and if both partners go into care at the same it will be completely ineffective. Not to mention the fact that all legal planning, especially Protective Property Trusts, needs regular review. Circumstances, taxes and the law are always changing.
As far as Full Property Trusts are concerned, the following was published by a solicitor on This is Money.
“1) An asset protection trust brings with it an immediate loss of control over your wealth and cannot be guaranteed to achieve the promised protection from care fees.
2) Even if the arrangement is successful, the funding available to you would be the basic care fee allowance set by the local authority.
3) Most people choose homes where the fees charged are higher, but as you have put wealth in trust you may not have the resources to top up and so be unable to enter the home of your choice.2
Not in my opinion a sound review of property trusts. Maybe I have taken it out of context, but my response would be.
1) Loss of control? Not if you set up the trust properly. It really pays to appoint the right trustees.
2) This point is true – except of course that the Trustees of your family trust can top up your care fees, though the Local Authority cannot force them too. And a trust set up with the deliberate intention of avoiding a forseeable and likely event is always open to challenge.
3) See 2) The comment is accurate only if the trust is set up wrongly.
We strongly recommend that you contact us to discuss your protective property trust needs!