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Wills, Probate & Trust

Property Trust Wills reduce the worry of care home fees

Thursday, August 1, 2019

The costs of care are a worry for many couples. They fear that the fees will whittle away the inheritance from the family home for children and grandchildren.

When couples make a will, the majority are unaware that they can increase the amount of money they can pass on to their heirs through a Property Trust Will in a way that mitigates care fees.

This type of Will means that couples living in England and Wales can protect at least half the value of the family home to keep it safe for the children.

With the right advice from an experienced lawyer, your Will can be written in a way that ensures half the family home is passed to the next generation immediately upon the first death of the couple. The Property Trust Will also ensures that the surviving wife, husband or civil partner can continue to live in the property for the remainder of his/her life so that the next generation cannot force the surviving spouse or civil partner out of the property.

Property Trust Wills also ensure that the surviving spouse or civil partner can downsize the home anytime after the first death of the couple.

With the right advice from an experienced lawyer, your Will can be written in a way that ensures half the family home is passed to the next generation immediately upon the first death of the couple.

The property, or the replacement property, is half-owned by the surviving spouse or civil partner with the other half is owned by the next generation.

The difference this can make to heirs can be substantial.  For example, a couple with a jointly owned property valued at £150,000 and other assets of £50,000 set up Property Trust Wills that mirror each other. When the first of the couple dies, his/her half share of the family home is transferred to the next generation. The remainder of the estate passes to the surviving spouse or civil partner, who, under the terms of the Property Trust Will, has the right to live in the property for as long as he/she wishes. The surviving spouse or civil partner also has all of the other, non-property, assets left to them in the Property Trust Will.

If the surviving spouse or partner eventually has to pay for care needs, whether he/she moves into a care home or has care provided at home, he/she will be financially assessed by the Local Authority. If the family home is worth £150,000, the surviving spouse or civil partner only owns half of it – £75,000 – because the other half is owned by the next generation. With other investments totalling £50,000, the Local Authority will assess a total of £125,000, as opposed to £200,000 had Property Trust Wills not been put into place.

If the surviving spouse or civil partner stay in a care home for more than five years at the annual average of £33,000 a year, all of the assets in the above example will be exhausted except for the amounts permitted by the thresholds set by central government. The Local Authority will offer financial support when personal assets drop below £23,250, with maximum Local Authority support coming in when there is less than £14,250 remaining.

In this example, the Estate is worth £14,250 on death but £75,000 of the value of the property has effectively been ring-fenced by the operation of the Property Trust Wills. It is an asset that belongs to the next generation and not of the spouse or civil partner at the time they required care.

Our solicitors are specialists who understand the process and complexity of Property Trust Wills. We appreciate the importance of the family dynamic, as well as the personal and financial circumstances of those in the next generation.

Samuel Phillips Law has a highly regarded team of Wills, Probate and Trusts solicitors who will work with clients from all backgrounds to ensure the most appropriate options are put into place to give them peace of mind. We would welcome the chance to discuss your needs with you.

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