Will, Family Protection Trust or Both?

pumpkinpie01

Hi, Husband and I are tenants in common on deeds (50%) each and both have 1 child each from previous marriages.

We would want to be able to stay in our property until death if one passed before the other.

Once both deceased we want to split inheritance 50/50 with each child (maybe even breakdown further to included grandkids).

Can this be arranged in a will or do we need and FPT?

Any help appreciated 🤷‍♀️

NedS

Others will advise, but I would highly recommend you use a STEP qualified solicitor who specialises in Trusts to help you make your Wills.

You can locate a local STEP qualified solicitor here:

https://www.step.org/directory/members/search

For reference, we recently paid around £1,000 for mirror Wills with immediate post death trusts (IPDT) leaving our 50% share of the property to our children in trust whilst the surviving spouse retained the right to live in the property for the rest of their life.

This is typical of the type of IPDT used in blended family situations such as your own.

Some things for you to consider. You say you want the inheritance to be split 50:50 with each child. Do you mean your half goes to your child and your husband's half goes to their child, or do you mean a genuine 50:50 split?

If you each leave your share of the property to your respective children, and your husband dies first (leaving their share to their child) and subsequently you go into a care home and have to use your share of the property to pay for your care, your child ends up with nothing. Is this what you both intended? If you were to both leave your respective halves to both children, can you trust your husband not to change their Will after you've died to leave their share entirely to their own child leaving your child with a 25% overall split and their child with a 75% overall share. These types of scenarios are why I would recommend using a STEP qualified solicitor to advise you when drafting your Wills.

Albermarle

You want a 'Life Interest Property Trust' to be included as part of your will (s)

This would mean the deceased's half of the house would be held in trust, and the surviving spouse could live there until they die. Then half the house would be inherited by each of the children.

Other assets could be split 50:50 in the normal way in the will.

That is only a basic outline and you should get legal advice ( and wait for other more experienced posters to comment)

Keep_pedalling

I associate the term family protection trusts with sharks who sell dodgy trusts for large sums of money.

The standard solution here is to make wills containing a clause that creates an immediate post death interest trust on the first death. This puts legal ownership of the deceased person’s share into trust but beneficial ownership remains with the surviving spouse. This protects both the surviving spouse and the child of the deceased. It is also tax efficient as it removes any CGT liability and uses none of the deceased NRBs.

Albermarle

I associate the term family protection trusts with sharks who sell dodgy trusts for large sums of money.

OP - as above please note that many trusts sold to families are often inappropiate, expensive and a big headache for executors. Often it will be intimated that it was a way of avoiding inheritance tax or care home fees. Usually they are only any good when you are properly wealthy ( ie Millions).

There are a couple of exceptions to this rule, and an ' immediate post death interest trust' ( which I referred to as a property protection trust ) is one of them.

RAS

If you own property, as a couple you have a joint IHT allowance of £1m on the second death if you leave your assets to descendants.

Please use a STEP qualified solicitor to write your wills. As a blended family, that's really important. You may want IPDI trusts and it is important that you discuss and understand implications of the conditions attached to them.

Sadly, those on this forum have seen multiple threads by people whose parents have used less qualified solicitors or will writers who upsell various trusts and schemes designed to "protect against IHT and care costs", despite most estates not paying IHT and care costs covered if the either spouse remains at home.

And in the process they have locked families into trusts with high fees and taxes. Often the family inheriting are worse off than if the trust did not exist. Sometimes the trust can be resolved using a deed of variation but that requires all beneficiaries to agree, so they all have to be adults.