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    • MysteryMan
    • By MysteryMan 17th Jul 17, 5:51 PM
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    MysteryMan
    Help needed to understand Property Trust Wills
    • #1
    • 17th Jul 17, 5:51 PM
    Help needed to understand Property Trust Wills 17th Jul 17 at 5:51 PM
    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!
Page 1
    • Yorkshireman99
    • By Yorkshireman99 17th Jul 17, 6:14 PM
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    Yorkshireman99
    • #2
    • 17th Jul 17, 6:14 PM
    • #2
    • 17th Jul 17, 6:14 PM
    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
    • By MysteryMan 17th Jul 17, 6:22 PM
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    MysteryMan
    • #3
    • 17th Jul 17, 6:22 PM
    • #3
    • 17th Jul 17, 6:22 PM
    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.
    Originally posted by Yorkshireman99
    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
    • By Crabapple 17th Jul 17, 6:34 PM
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    Crabapple
    • #4
    • 17th Jul 17, 6:34 PM
    • #4
    • 17th Jul 17, 6:34 PM
    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.
    Daughter born January 2012 Son born February 2014

    Slimming World ~ trying to get back on the wagon...
    • Yorkshireman99
    • By Yorkshireman99 17th Jul 17, 6:56 PM
    • 2,649 Posts
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    Yorkshireman99
    • #5
    • 17th Jul 17, 6:56 PM
    • #5
    • 17th Jul 17, 6:56 PM
    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.
    Originally posted by Crabapple
    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
    • By MysteryMan 17th Jul 17, 7:03 PM
    • 25 Posts
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    MysteryMan
    • #6
    • 17th Jul 17, 7:03 PM
    • #6
    • 17th Jul 17, 7:03 PM
    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.
    Originally posted by Yorkshireman99

    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
    • By Crabapple 17th Jul 17, 7:22 PM
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    Crabapple
    • #7
    • 17th Jul 17, 7:22 PM
    • #7
    • 17th Jul 17, 7:22 PM
    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.
    Daughter born January 2012 Son born February 2014

    Slimming World ~ trying to get back on the wagon...
    • Yorkshireman99
    • By Yorkshireman99 17th Jul 17, 7:28 PM
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    Yorkshireman99
    • #8
    • 17th Jul 17, 7:28 PM
    • #8
    • 17th Jul 17, 7:28 PM
    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.
    Originally posted by Crabapple
    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
    • By Browntoa 17th Jul 17, 7:32 PM
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    Browntoa
    • #9
    • 17th Jul 17, 7:32 PM
    • #9
    • 17th Jul 17, 7:32 PM
    As above , set up wrong it will be successfully challenged as deprivation of assets
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's and Discount Code boards which means I'm a volunteer to help them run smoothly and I can move and merge posts there. However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • Browntoa
    • By Browntoa 17th Jul 17, 7:34 PM
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    Browntoa
    http://dailym.ai/2mpZMmQ

    http://www.telegraph.co.uk/finance/personalfinance/insurance/longtermcare/10117822/Warning-over-care-home-trust-schemes-that-promise-to-protect-your-property.html

    http://www.bbc.co.uk/news/business-39589083
    Last edited by Browntoa; 17-07-2017 at 7:39 PM.
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's and Discount Code boards which means I'm a volunteer to help them run smoothly and I can move and merge posts there. However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • Crabapple
    • By Crabapple 17th Jul 17, 7:43 PM
    • 1,506 Posts
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    Crabapple
    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.
    Daughter born January 2012 Son born February 2014

    Slimming World ~ trying to get back on the wagon...
    • troubleinparadise
    • By troubleinparadise 17th Jul 17, 7:54 PM
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    troubleinparadise
    It's not only what choices the surviving spouse might have as regards residential care - if they wish to downsize by selling up a larger house they may well find they cannot afford another property with only half the funds to spend.

    The number of people requiring residential care is far less than is suggested, and the average care home stay is a little under 3 years.

    People have been misled into thinking that they will enter residential care as a given in old age.
    • Yorkshireman99
    • By Yorkshireman99 17th Jul 17, 8:02 PM
    • 2,649 Posts
    • 2,089 Thanks
    Yorkshireman99
    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?
    Originally posted by MysteryMan
    Don't take my word for it. Just remember that if it was so easy to avoid care home fees everyone would be doing it! Go and get some paid for professional advice from a trust specialist. It should only cost a couple of hundred pounds and many solicitors offer an initial free half hour consultation.
    Last edited by Yorkshireman99; 18-07-2017 at 10:24 AM.
    • getmore4less
    • By getmore4less 17th Jul 17, 8:58 PM
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    getmore4less
    Life interest trusts set up by will are standard

    When the trust rules changed in 2006 these rusts were protected

    the terms you are looking for are

    Immediate post-death interest trusts.

    Effectively the assets remain part of the estate of the survivor for tax purposes but are ring fenced from things like care.

    There is an issue if the survivor is not a spouse that can benefit from transferable nil rate band other alternatives should be considered if IHT is a risk for th survivor.

    If the trust just hold assets that don't generate income like a house the survivor will live in they are easy to administer.
    • Keep pedalling
    • By Keep pedalling 18th Jul 17, 9:11 AM
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    Keep pedalling
    Personally I would avoid doing this because security in old age is a higher priority than passing on the house. Even if I did not feel that way I would still not do it, as it is highly unlikely that I would be in care for long enough to burn through more than 50% of my stupidly priced house.
    • getmore4less
    • By getmore4less 18th Jul 17, 9:26 AM
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    getmore4less
    Personally I would avoid doing this because security in old age is a higher priority than passing on the house. Even if I did not feel that way I would still not do it, as it is highly unlikely that I would be in care for long enough to burn through more than 50% of my stupidly priced house.
    Originally posted by Keep pedalling
    The life tenant can retain the same securty as if they owned the place.
    • Keep pedalling
    • By Keep pedalling 18th Jul 17, 9:53 AM
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    Keep pedalling
    The life tenant can retain the same securty as if they owned the place.
    Originally posted by getmore4less
    I was not thinking of security in my own home, but security if I had to move into long term care. Under no circumstances do I ever want to become reliant on LA funding.
    • Browntoa
    • By Browntoa 18th Jul 17, 9:54 AM
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    Browntoa
    the fear of care home fees eating up all your assets outweighs the reality


    I don't personally know anyone who has needed residential care that's involved the loss of property , my step dad was bed bound for a year before he died with carers coming in twice a day but my mum retained the house and it never entered the point of a charge being put against it
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's and Discount Code boards which means I'm a volunteer to help them run smoothly and I can move and merge posts there. However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • Mrs pbradley936
    • By Mrs pbradley936 18th Jul 17, 2:56 PM
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    Mrs pbradley936
    I am no expert on this but I would have thought that children and vulnerable adults that are unable to manage their own affairs need a trust but grown ups - well once past the silly stage of up to about 25 ought to be able to sort out their own finances if left any money.

    My husband is always being approached by his accountant to "protect" our assets with some sort of insurance that will take care of inheritance tax but he refuses to even discuss it. He thinks that if anyone ever left him a hefty amount he would gladly pay any tax!!

    We have two sons - one of them far more sensible with money than the other but we will leave them with whatever we have not spent and if they waste it so be it. We will not be here to worry about it all.
    • Keep pedalling
    • By Keep pedalling 18th Jul 17, 10:10 PM
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    Keep pedalling
    I am no expert on this but I would have thought that children and vulnerable adults that are unable to manage their own affairs need a trust but grown ups - well once past the silly stage of up to about 25 ought to be able to sort out their own finances if left any money.

    My husband is always being approached by his accountant to "protect" our assets with some sort of insurance that will take care of inheritance tax but he refuses to even discuss it. He thinks that if anyone ever left him a hefty amount he would gladly pay any tax!!

    We have two sons - one of them far more sensible with money than the other but we will leave them with whatever we have not spent and if they waste it so be it. We will not be here to worry about it all.
    Originally posted by Mrs pbradley936
    The "some sort of insurance" may well be a very good idea. We have a second death term insurance policy written in trust to our children . This covers the IHT that would be payable on gifts that we have already given to our children should neither of us outlast the 7 year potentially exempt period.
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