Property Protection Trust for Tenants-in-Common - Is this neccessary?

[justjean]

My husband and I (married for many years) both have adult children from previous marriages. We own our property as tenants-in-common in a 50/50 share.
As I have always understood it, this entitles me to leave my share to my children, and my husband his share to his children in our Wills (which are about to be updated).

I also believed that this ownership was 'set in stone' so that when one of us dies, their share of the property is safe and cannot be touched (i.e. it still belongs to them after death) and that their children will inherit when the survivor eventually dies and the property is sold. The proceeds of which will then go half to my children and half to his.
I have now been told that this is not necessarily so, and that a 'property protection trust' should be set up to safeguard our individual shares of the property. Is this correct?

Furthermore, I've been given to understand, that such a trust would protect the property from being considered for assessment if after one of us has died, the survivor eventually goes into care. Hopefully a long way of, and hopefully not at all! Again, is this correct?

The present situation is that my husband, who is partially disabled and rather frail, might need to go into care in the near future, but till then he receives care at home. So a final question: would this affect any such Trust? And if it prevents him making a Trust, should I - and would I be able to - make a Trust to protect my share of the property?

Our current Wills state that each of us allows the other to live in the property after one of us has died, and can carry this over to another property if the survivor moves house. Keeping the integrity of the deceased partner's share. All beneficiaries would then receive their inheritance after the death of the survivor.
We always thought that this was safeguard enough.

Sorry this has been so long, but I wanted to make it as clear as possible. Thank you to anyone who can advise me; it will be very much appreciated. :-)

[enaid]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

This may make it a bit clearer

https://www.gov.uk/joint-property-ownership/overview

[justjean]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

This may make it a bit clearer

https://www.gov.uk/joint-property-ownership/overview

Thank you Enaid. I had a look at that, but it doesn't really answer all I need to know, but thanks for your trouble anyway

[enaid]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Well some info on the trust you mentioned, this is stuff I have had a read of when making a decision myself on our property
http://www.telegraph.co.uk/finance/p...-property.html

[justjean]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Thank you so much for that link Enaid. Only just seen it as I was about to retire for the night. I've clicked on it and the article looks interesting, but I will read it thoroughly tomorrow. I really appreciate you going to the trouble. Thanks again :-)

[justjean]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Well some info on the trust you mentioned, this is stuff I have had a read of when making a decision myself on our property
http://www.telegraph.co.uk/finance/p...-property.html

Hi Enaid,
I went back to this link yesterday when I had time to read and digest the information. It was very interesting, but mostly warning people about setting up a trust to safeguard their property from being assessed for care home fees. I appreciate that warning, however, my main concern regards whether or not it is sufficient for each of us to leave our share to our (own) children in our wills, and stating that if one of us dies, the survivor can continue living in the property until they die, when both mine and his children will receive their inheritance as per our Wills.
I think I might post this specific question in a new thread on a more appropriate part of the forum. But I am very grateful to you for the help you have given, so thank you very much :-)

[enaid]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Ok, I will ask [MENTION=85500]Peridot[/MENTION] to take a look though she is brill at this stuff, save you reposting

[justjean]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Ok, I will ask @Peridot to take a look though she is brill at this stuff, save you reposting

Thank you so much Enaid, that's very kind of you. You're a star!! :-D

[Peridot]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Hi Justjean,

I'm only here 3 days a week currently and floating around all sorts of things when I am here, so sorry for the delay in responding.
Basically the Local Authority can 'look behind' any arrangements that have been set up and which they believe have been created to avoid care home fees. However there are certain things that they can not do, such as order the sale of a property whilst someone still lives there.
It is probably best if I use scenarios to explain (hopefully clearly)

1. You own property jointly as joint tenants. The property passes by 'survivorship' which means that upon the death of one of the joint tenants the property automatically passes to the survivor. The survivor then owns the whole property. Subsequently they need to move to a care home, the LA looks to the value of the whole property to go towards care fees due ie 100%.

2. You own property jointly as Tenant's in Common (this can be easily achieved by severing your tenancy and having a restriction placed on the property register at HMLR). Upon the death of one of the joint owners they could will their 50% share to someone other than their partner/spouse/co-owner. This means that in the future, should the survivor require care home fee assessment then only their share can be used in the calculation so their 50% value not 100% is included in the calculation. It does not prevent the LA looking to the property value, but would prevent the whole value being swallowed up in fees. The beneficiary of the first will owns the other half so this can't be used in any calculation.

It is really important however that you do protect the surviving co-owner with a right to reside at the property until either their death or such other event as indicated in the Will eg another marriage. In addition it prevents the beneficiary from potentially selling the property whilst the survivor is still living there.

There have been numerous suggestions in the past to try and protect assets from the care fee calculations, for example transferring your property to your children now. The idea being the property is then owned by them and therefore can't be used in the care fee calculation, and your wonderful children would let you stay there, as long as you wish. Yes, it would be for the LA to look into your assets (they may not but it is becoming more common) and decide whether there has been an intention to deprive (which there obviously has been) but I would never recommend this course of action. Even if you got away with it, no matter how much we love family we don't know what could happen in the future. If for example a child divorced or was made bankrupt then the property is classed as their asset and could be taken, leaving you with nothing!

My other point I generally make is the fact that we all work incredibly hard for what we have and although we would love to pass it on to those we care about, with us all living a lot longer, and society having changed so much so that most couples now both work and could not take in elderly relatives, the care needs of the elderly have to be funded from somewhere. Local Authority care homes are generally not the most lovely of places and in order to have something more like home it is often necessary to pay significantly more for your care. In any event, you may never need to go into a care home.

So in short your wills leaving your half share of the property to the children with a right to reside for the survivor of you is adequate to protect half the property. Nothing can protect the whole of the property from care fee assessment.

A property protection trust basically does the same ie protects 50% of your property (not 100%) and also prevents the 50% share being included in any bankruptcy or divorce scenario. It would also assist if there are likely capital gains issues in the future for the children, if there is a significant rise in the property value before it is sold.

You asked whether your husband can create the same sort of 'trust'. Provided he has mental capacity to do so he can, is the short answer.

You also have the added issue of second families so possibly only the children from the first of you to go, will inherit the 50% value unless you leave each of your 50% shares to both of your sets of children which would ultimately mean that they all receive the same. If each of you only benefit your own children then the survivor may have used some of their share for care fees so it wouldn't be a 50% share of the property their children would receive.

Of course then you will be trusting that the survivor of you doesn't change their will to leave everything to their own children. Families and finances are so complicated nowadays. I are coming more and more to the conclusion that we have to start being a little selfish in this area of our lives. Enjoy what you have worked hard for and if you are lucky enough to be able to, help those around you while you're still here so at least you see the appreciation. Unfortunately the younger generations are not going to benefit from inheritance the way they could have done in the past.

I would strongly recommend you taking proper solicitor advice on your new wills being drafted, if you haven't already. Do pop back if I can try and help further.

[justjean]

Re: Property Protection Trust for Tenants-in-Common - Is this neccessary?

Thank you so much Peridot for your comprehensive and very helpful reply. I think you have answered all I need to know, and explained everything very clearly - and I am so grateful for that. It has lifted a weight off my shoulders as everything is now much easier for to me to understand.
I feel more confident now to proceed with making my new will. And my husband, his.
So, thank you again, and thanks also to Enaid for asking you to help. You do a wonderful job on this site, and I appreciate all you do to help people like me. :goodjob: