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Property Protection Trust

Richard Martin explains how a property protection trust can protect your greatest asset.

If you are a surviving spouse and have to go into full time residential care, the respective Local Authority will assess your property as capital and use the value of this capital to pay for your nursing fees. 

This is an extremely common scenario and can quickly evaporate the notional value of your estate.

A sensible and lawful way of mitigating this potential threat is to set up a property protection trust as part of one’s will.

For this to work, the couple who own the property must be healthy and have no foreseeable need for long term care.  Their children’s individual financial circumstances should be stable.

The couple divide the ownership of the property on a 50/50 basis.

Whoever dies first states in their will that their share of the property is put into a property protection trust with the remaining spouse as trustee plus at least one other and with a life interest in the property.

This means that the remaining spouse only owns 50 per cent of the property which therefore then has no realistic market value...you cannot sell half a house.

Should a care assessment take place then at least 50 per cent of the property value will be disregarded.

The trustees of the Property Protection Trust will decide who receives the proceeds of the property sale. They can postpone the inheritance to any potential beneficiaries who are under financial duress until they are in a more favourable financial position.

Another advantage of the Trust is that should the surviving partner re-marry, the new spouse will only have a claim to 50 per cent of the property value.

For more information please visit Estate Preservation’s website.

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