Help needed to understand Property Trust Wills

Not sure if this is an appropriate topic, but, am hoping someone can offer some advice on wills, please!

At the moment, my wife and I have similar wills....basically, leaving whole estate to spouse and, if they are no longer alive, split between 2 children.

One of my wife's friends has told her that they have change their wills so that on the first death then that person's estate would be put in trust for the children. The surviving spouse would still be able to live in the house. On the 2nd death then all their estate would pass to children. The advantage being that if the surviving spouse needs to go into care then the local council would not be able to take into account the assets in trust when assessing for help with care fees.

I gather this is quite a common practice nowadays.

So, I have a load of questions about this!

1) A 'normal' will seems quite straightforward and there are several places on the web that either create one for you on the cheap or allow you to download a pro-forma to create your own. Is this the case with a "Trust Will" or is this something that really does require the services of a solicitor?

2) Is it just 50% of the property that can be put into the trust or can it be 50% of the whole estate? I.e. Can it include other assets such as money, investments, etc?

3) I assume there is a cost for setting up a trust. Is this incurred at the time of writing the will or would it be incurred at the time of the first death?

4) On the death of the 2nd person, how do the children get access to the assets (property) in the trust? Is something needed to "break" the trust or do they have free access already because of the trust?

5) If there is a cost then is this paid at time of writing the will or at the time of the 2nd death?

6) Any ball-park figures for setting up and breaking a trust would be helpful too!

Any help would be most gratefully received!
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Comments

  • Yorkshireman99
    Yorkshireman99 Posts: 5,470 Forumite
    Dream on! These kind of schemes are peddled by unscrupulous firms who charge lots of money to set them up. They don't work as the person still lives in the house and this is known as a gift with reservation.
  • MysteryMan
    MysteryMan Posts: 68
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    Dream on! These kind of schemes are peddled by unscrupulous firms who charge lots of money to set them up. They don't work as the person still lives in the house and this is known as a gift with reservation.

    Really?!?!? There seems to be loads of sites on web describing "Property Trust Wills" and the following was taken from Which?, who are not looking to sell anything to you.....

    Will trusts and long-term care

    If you use a will trust and your partner dies, you as the surviving spouse retain a right to live in the house. If you need to pay for care, only your share is assessed by the local authority.

    The part owned by the trust is not counted. In this way it's protected from care home costs. Government rules (Charging for Residential Accommodation Guide) suggest that this arrangement will not be contested as 'deliberate deprivation', meaning that you have deliberately split your assets to avoid paying high care-home fees.


    Am I really wasting my time looking into this?
  • Crabapple
    Crabapple Posts: 1,573 Forumite
    No, you aren't wasting your time. Life interest trust wills are perfectly normal and legal and effective.

    It's nothing to do with gifts with reservation as it is the surviving spouse living there based on their own ownership and interest in the trust. Doesn't affect IHT at all but can protect assets for care fees.

    I doubt you will find anyone on here recommending you download any type of will but you should go see a high street solicitor -ask friends/family/colleagues for anyone they have used and got good service.

    You can put half the house and any sole name cash assets in but you do need proper advice on the pros and cons. Will be more complex if there is cash in it to, there's little admin to the trust if it's just a house.

    Costs round by me for those types of will around £400 I think but will depend where you are and the firm you use so may be worth ringing around too.
    :heartpuls Daughter born January 2012 :heartpuls Son born February 2014 :heartpuls

    Slimming World ~ trying to get back on the wagon...
  • Yorkshireman99
    Yorkshireman99 Posts: 5,470 Forumite
    Crabapple wrote: »
    No, you aren't wasting your time. Life interest trust wills are perfectly normal and legal and effective.

    It's nothing to do with gifts with reservation as it is the surviving spouse living there based on their own ownership and interest in the trust. Doesn't affect IHT at all but can protect assets for care fees.

    I doubt you will find anyone on here recommending you download any type of will but you should go see a high street solicitor -ask friends/family/colleagues for anyone they have used and got good service.

    You can put half the house and any sole name cash assets in but you do need proper advice on the pros and cons. Will be more complex if there is cash in it to, there's little admin to the trust if it's just a house.

    Costs round by me for those types of will around £400 I think but will depend where you are and the firm you use so may be worth ringing around too.
    Such trusts do not protect against care fees as they are a deliberate deprivation of assets. They also don't protect against IHT as many claim they do. If the OP is really determined then he should consult a trust specialist such as a solicitor who is a STEP member.
  • MysteryMan
    MysteryMan Posts: 68
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    Such trusts do not protect against care fees as they are a deliberate deprivation of assets. They also don't protect against IHT as many claim they do. If the OP is really determined then he should consult a trust specialist such as a solicitor who is a STEP member.


    Thanks for reply and information. I have to admit I am more confused than when I started!

    Do you have experience or examples of where "property Trust Wills" have been overturned/successfully challenged by local authorities when assessing for care fees?
  • Crabapple
    Crabapple Posts: 1,573 Forumite
    It is not deprivation of assets as it is the deceased that disposed of the asset by will, not a living person gifting their own assets away knowing they will need care.

    They don't have any IHT effect at all really, it's still added in when the second spouse dies and the assets taxed if they are over the thresholds and unused allowances still transfer.

    I wonder if Yorkshireman is confusing these with the lifetime asset protection trusts which are likely to cost thousands and are not a good idea at all.

    I guarantee a STEP member would discuss life interest trust wills with you and prepare them if you were happy they were appropriate for you after that discussion.
    :heartpuls Daughter born January 2012 :heartpuls Son born February 2014 :heartpuls

    Slimming World ~ trying to get back on the wagon...
  • Yorkshireman99
    Yorkshireman99 Posts: 5,470 Forumite
    Crabapple wrote: »
    It is not deprivation of assets as it is the deceased that disposed of the asset by will, not a living person gifting their own assets away knowing they will need care.

    They don't have any IHT effect at all really, it's still added in when the second spouse dies and the assets taxed if they are over the thresholds and unused allowances still transfer.

    I wonder if Yorkshireman is confusing these with the lifetime asset protection trusts which are likely to cost thousands and are not a good idea at all.

    I guarantee a STEP member would discuss life interest trust wills with you and prepare them if you were happy they were appropriate for you after that discussion.
    These schemes usually involve putting assets into trust BEFORE the first death in a vain attempt to avoid care home fees or IHT. Of course assets left to a trust are not deprivation. Nevertheless we agree that the OP needs to get professional advice.
  • Browntoa
    Browntoa Posts: 49,288
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    As above , set up wrong it will be successfully challenged as deprivation of assets
    I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.
  • Browntoa
    Browntoa Posts: 49,288
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    edited 17 July 2017 at 6:39PM
    I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.
  • Crabapple
    Crabapple Posts: 1,573 Forumite
    Can't quote on my phone.

    The OP is talking about Life Interest Trist wills. They are not at all the same as the asset protection trusts touted to solve all care fee and IHT problems which I totally agree are a huge issue and not in any way to be advised.

    Life interest wills are quite normal and usual and are effective as stated. You need to be aware of what assets the surviving spouse will have and if that will give them their choices should they need residential care.

    OP should go discuss this with a lawyer in a decent high street firm.
    :heartpuls Daughter born January 2012 :heartpuls Son born February 2014 :heartpuls

    Slimming World ~ trying to get back on the wagon...
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