How A Property Trust Will Can Protect The Value Of Your Home

It’s not something most people think about, but it’s essential to write a Will and preserve your wealth for your family’s future after your death. Among other steps you can take, you should ensure your home is handled according to your wishes after you die, after all, it’s likely to be your biggest asset. However, as the homeowner, there may be a need for professional healthcare in the future, which could seriously affect how much your children or grandchildren could inherit. 

In this article, we’ll explain how to help protect your home’s value for the long term. Let’s look at a typical example of a married couple and see how a Property Trust Will could affect them and their beneficiaries.

Example 1: Having no Property Will Trust in place

An older, married couple, Mr & Mrs Taylor, are both in their 70s, live in England, and have one adult child. The house they live in is owned by them outright and is worth £150,000, and between them, they have life savings of £50,000, so total assets of £200,000.

Fortunately, they’ve written their Wills and want to keep things as simple as possible. Their standard Will’s both say that when one of them dies before the other, everything is passed directly to the surviving spouse. When the surviving spouse dies in the coming years, everything then passes to their adult child.

This is a very common scenario, and it’s not wrong – but it can complicate matters. Let’s look at what can happen.

Let’s say that, one day, Mr Taylor dies. In accordance with his Will, his entire estate (money, possessions, and property) passes directly to Mrs Taylor. She then has all the assets transferred into her name, including the family home, which means she now has total assets amounting to £200,000 in her name.

Several years later, Mrs Taylor becomes frail, with health issues that mean she shouldn’t live alone anymore. One day, she falls, which leaves her unable to look after herself or her home properly. With no full-time care available from the adult child, it means Mrs Taylor has to find residential care accommodation.

Normal procedures mean that Mrs Taylor has her needs and finances assessed by her local council to determine whether she can pay for her residential care. Because she has more than £23,250 in her name, her care costs do need to be paid by her. The cost of the care home is £30,000 per year, and she stays there for 5 years, meaning her total care fees come to £150,000.

With her total assets of £200,000 now reduced to £50,000, it means the adult child would now inherit that £50,000 only.

Property Trust Wills in action

As we said, this is a very common scenario in marriages and civil partnerships. But, many older couples now realise that they might need residential care in the future and will look to protect the value of their jointly owned family home so it can be passed to their children in its entirety. This is done by creating a Property Trust Will that ensures half of the home and its value cannot be touched when the first spouse or civil partner dies.

The Property Trust Will ensures the surviving spouse or civil partner can live in the property as normal for the rest of their life, but they’ll only own their half while the other half sits in trust. Should residential care become an issue for the surviving partner in the future, only the property half owned by them will be taken into account when assessed by the council, not the half that’s in Trust.

Example 2: Having a Property Will Trust in place

Let’s go back to Mr & Mrs Taylor. So, they still have total assets worth £200,000 (£150,000 on their house and £50,000 in joint savings), but let’s see how their scenario would play out with a Property Trust Will in place.

When Mr Taylor dies, as per the instructions in his Will, his half of the property transfers into the Property Trust. The remaining assets in his estate pass on to Mrs Taylor as normal, and she can continue living in the property for as long as she wants. Along with the assets she receives from Mr Taylor’s estate, Mrs Taylor’s day-to-day life continues very much as in example 1. But now, the Property Trust means:

• The property can be sold if Mrs Taylor wishes
• Proceeds from any house sale can go into a new property if she wants to move

Over the coming years, Mrs Taylor will become unable to live alone and need to move into a residential care home, meaning she’ll be assessed by her local council. The assessment will show that the house is still worth £150,000, but she only owns half of it as the other half is in trust. That equates to £75,000, and with her other assets valued at £50,000, she has a total of £125,000.

The cost of the care home is still £30,000 per year, and she stays there for 5 years, meaning her total care fees still come to £150,000. That means the value of Mrs Taylor’s overall estate dips below the £23,250 threshold after 4 years, and the council can then offer financial support. If and when those assets dip under £14,250, the council will provide maximum financial support.

When Mrs Taylor dies, her estate can only be valued at £14,250. However, the value of the half of the house that’s in Property Trust remains unchanged and untouched by the care fees, so is still worth £75,000.

But now, rather than inheriting £50,000, the adult child would instead inherit £89,250. This is made up of Mrs Taylor’s remaining £14,250 plus the £75,000 from the half of the house that’s in Property Trust.

Choose MJR Solicitors for your Property Trust Will

While a simplistic example, it’s clear that the main beneficiary would be better off thanks to the parents having a Property Trust Will in place, increasing the inheritance by an additional £39,250.

Having any Will in place is important, but if you own your home, you can protect the value of your home, but ensuring it’s set up correctly can be complicated for the uninitiated. This is where MJR Solicitors can help you.

We have a team of legal specialists, all experienced in setting up Property Trust Wills, who will act on your behalf, meaning a much easier process for you, and give you advice and answers to your questions, so you have all the jargon-free facts you need. 

Find out more about our Will writing and estate planning services or call the team today on 01243 945 054, email us at info@mjrsolicitors.co.uk or send us a message on our contact form to book your free 30-minute consultation with us.