Lifetime (Family Protection) Trust
These are set up during the lifetime of the occupant and are separate to the Will. Under the Trust, the homeowner is also a beneficiary in this way they have similar benefits to the other trusts mentioned, as well as several unique advantages.
- Once the Trust is created the occupant can continue to live in the home for the rest of their life or lives, or until the point where continued residence is no longer required or appropriate.
- The Trustees cannot evict the life tenants. If later on in life the surviving spouse wants to sell the property, buy another one, thereby releasing some equity, they can do so. The proceeds of the sale will be invested and former owner will receive the interest or income earned on the invested capital.
- Gifting your house to someone else whilst still alive can mean you lose all control and rights over the property.
- Once set up, the Lifetime Trust means that the property is not formally part of the estate on death and is therefore not subject to the Probate process saving time, money and reducing administration at a difficult time.
- The property can be sold or transferred to the stipulated beneficiaries immediately after death.
Suitable for a single occupant:
- Unlike the other Trusts listed, a Lifetime Trust can be set up by a single unmarried occupant or widower. A Lifetime Trust is best suited to those who have no outstanding mortgage. If you have a mortgage in place and are interested in the above, agreement can potentially be gained from your lender but will depend on your specific circumstances.
- The current Residents Nil Rate Band cannot be claimed on assets placed in a lifetime trust, meaning that these trusts should not be used on a standalone basis for Inheritance Tax Planning.
- If you need help with Inheritance Tax planning or have questions regarding Inheritance Tax. Findon Legal Consultants can arrange for a specialist to discuss this with you further.
- It is important with these trusts, that annual minutes are kept by all trustees to ensure that the trust is managed properly.
- These trusts are potentially liable for 10 yearly charges should the asset placed in trust increase in value above the nil rate band currently £325,000 for a single occupant or £650,000 for a married couple. The current charge is a maximum of 6% of the amount above the nil rate band.
- A Lifetime (Family Protection) Trust: To discuss whether this trust may affect any liability with regards a Local Authority assessment for care please contact Findon Legal Consultants on 01634 812951 or contact us on the enquiries section of this Website.
- People often want their children to inherit their family home in the event of one or both of them passing away, however, without sufficient protection this may not always be possible.
- In circumstances where a Protective Property Trust is not in place and the home is jointly owned, the house would automatically pass over to the surviving partner. This creates a potential problem if the surviving partner then goes on to remarry leaving the estate to their future wife or husband. They may in turn leave the estate to their children of the new relationship as well as the deceased partners children, reducing the overall share. There is also a risk that they may leave it to the new family only, disinheriting the deceased partner’s beneficiaries.
Dependant Relative Claims:
- It is more difficult to challenge or contest a Lifetime Trust compared to a Will.
- A Trust can be put in place and allow access once a child is deemed reliable.
Contact Findon Legal Consultants for more information on these or any other Trusts.
Let our experience be your guide