Putting a property trust in our will

loki20

Hello,

my partner and I are not married, but have two kids. We have decided to get a civil partnership since we were going through our finances and basically came to the conclusion that if the worst was to happen, not being legally “joined” would make everything difficult.

we are also making wills and are considering adding a trust for our property that automatically goes to our kids. The provision being that the surviving partner could live in the house as long as needed. The benefits of doing this are that it’d be excluded from inheritance tax, and also that half the property couldn’t be used to pay for care in old age as only half would be owned by the surviving party.

I certainly understand these benefits, and also it ensures that the surviving party can’t rejig inheritance of that portion of the estate if they were to remarry/have new children etc. the cons seem more abstract to me. It seems like there might be situations where the surviving member and the kids may need to sell the property to free up assets, but perhaps that part can be solved by having a solid joint life insurance policy in place.

Does anyone have any thoughts on the issue? Are my concerns about adding in hurdles if the worst should happen reasonable? Or do the pros outweigh the cons? Any advice appreciated.

Savvy_Sue

There can be clauses added to allow the survivor to downsize, move house, move a partner in (or not), and I'd suggest getting your wills drawn up by a STEP member, allowing them to go through all the What If scenarios with you.

https://www.step.org/about-step/public

Civil Partnership / marriage is a no brainer, and so is Lasting Power of Attorney. 

Emmia

Savvy_Sue said:

There can be clauses added to allow the survivor to downsize, move house, move a partner in (or not), and I'd suggest getting your wills drawn up by a STEP member, allowing them to go through all the What If scenarios with you.

https://www.step.org/about-step/public

Civil Partnership / marriage is a no brainer, and so is Lasting Power of Attorney. 

But if you do the wills before you CP / marry make sure the solicitor knows that, as usually marriage invalidates previous wills.

Marcon

loki20 said:

Hello,

my partner and I are not married, but have two kids. We have decided to get a civil partnership since we were going through our finances and basically came to the conclusion that if the worst was to happen, not being legally “joined” would make everything difficult.

we are also making wills and are considering adding a trust for our property that automatically goes to our kids. The provision being that the surviving partner could live in the house as long as needed. The benefits of doing this are that it’d be excluded from inheritance tax, and also that half the property couldn’t be used to pay for care in old age as only half would be owned by the surviving party.

I certainly understand these benefits, and also it ensures that the surviving party can’t rejig inheritance of that portion of the estate if they were to remarry/have new children etc. the cons seem more abstract to me. It seems like there might be situations where the surviving member and the kids may need to sell the property to free up assets, but perhaps that part can be solved by having a solid joint life insurance policy in place.

Does anyone have any thoughts on the issue? Are my concerns about adding in hurdles if the worst should happen reasonable? Or do the pros outweigh the cons? Any advice appreciated.

If you're in a civil partnership there's no IHT payable on anything left by the first partner to the surviving partner. 

Care home fees - see https://www.radiotimesmoney.com/retirement/a-question-of-trust/ and https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/do-i-have-to-sell-my-home-to-pay-for-care/

You could be making your lives needlessly complicated - and in a worst case, putting the house in trust could mean that the children, when they come to inherit your home, lose out on the resident nil rate band, depending on the type of trust used.

Keep_pedalling

It is quite a common clause to include in mirror wills especially for younger people who are more likely to remarry after the death on one partner. 

Cornish_mum

Hi we have a similar clause in our mirror wills (creating an IPD trust for our share of our property), drafted by a STEP solicitor (trust and estate TEP). Our wording has no implications for IHT or FTB status for our kids, so I would be cautious about using a firm that claims the trust will save on that. 

Just to add - we in our 40’s, have young children and I have aggressive cancer. So our motivation is quite specific regarding this clause. We also have a clear plan on dissolving the trust, when our kids leave home (buy their first place), my husband retires and downsizes (which was always our plan).