Overview
A Property Protection Trust is one of the most common types of trusts to include in your Will for co-owners of a property. These Wills are perfect for anyone who owns a property which they would like to protect for family generations. This sort of trust ensures your property (or your share of the property) goes into trust and is protected for your chosen beneficiaries while allowing someone else to benefit from the property.
This will would be a good option for couples who are married, whether first or second marriage and have children from another relationship. This would mean that you could leave your share of the property to your children as the ultimate beneficiaries, but allow your spouse to live in the property until they die or remarry.
A property trust also protects the value of the property of the person who died first from being used to pay care home fees for the spouse. This means that the deceased half share of the property is protected for the benefit of the beneficiaries, normally the deceased’s children. Only properties held
Advantages to a Property Protection Trust
1. Asset Protection
Protect the property for the beneficiaries i.e. the children, ensuring they ultimately receive a share of the home.
2. Security
Security for your spouse knowing they have the family home to live in for life.
3. Control
You keep full control of the property until death.
4. Care Home Fees
Safeguards your share of the property against the surviving spouses care home fees.
Disadvantages to a Property Protection Trust
1. Surviving Spouse Control
Loss of control over the property for the survivor. As the survivor would only own 50% share of the property, they would need the Trustees agreement to sell.
2. Legal Fees
Probate would be required on first death to enable to the property to be put into trust.
3. Inheritance Tax Consideration
Future IHT liability as the Property Protection Trust is treated as part of the survivor’s estate for the purposes of IHT.
If the survivor ceased the Property Protection Trust during their life time, this would be treated as a potentially exempt transfer (PET) from them to the beneficiaries. The survivor would need to last 7 years from the PET for it not to form part of their estate for IHT.