PROTECTIVE PROPERTY TRUST
A property protection trust Will is a Will designed to help protect an individuals share of a jointly owned property. The half share of the family home belonging to the first person to die, passes into the trust. This would be a life interest trust in favour of the survivor which means that they can benefit from the share of the house in the trust during his/her lifetime and on their death the trust fund passes to others, usually children of the family.
The most common way people own property is as joint tenants, this means on first death the property is now owned in the sole name of the survivor, and can have some devastating consequences for children.
A more flexible way to own property is as tenants in common. This means the property is owned by the same two people in parts normally half each. Each part owner can leave their half to whom they wish through the Will giving complete protection to the survivor as explained above.
CASE STUDY 1 JOINT TENANTS
Tony and Kathy are in their 30s have two young daughters Tina and Julie. They own their home as joint tenants and have a mortgage and life insurance to cover the mortgage in the event of either death. Their Wills are written so they leave everything to each other and on the last death to their to daughters equally.
Unfortunately Tony dies in a car accident. The life insurance clears the mortgage as planned. Three years later Kathy meets Carl who has been married before and has a son from this marriage. Carl and Kathy get married and live in the family home with Tina and Julie. Sadly 10 years later Kathy dies and the house now belongs to Carl. If Carl writes a Will leaving the house to his son then Tina
and Julie receive no inheritance from their mother and farther s property.
CASE STUDY 2 TENANTS IN COMMON
Tony and Kathy change the ownership of the property to tenants in common. They then write their Wills so they each leave their half of the property to their daughters, in trust to be given to the daughters on the death of the survivor. Unfortunately Tony dies in a car accident. The life insurance clears the mortgage as planned. Tony’s half of the property now passes into the trust held for Tina and Julie until the death of Kathy. Kathy meets Carl and they get married with Kathy owning her half of the property. Sadly 10 years later Kathy dies, her half of the property passes to Tina and Julie who now own the property in full.
WHO IS A PROPERTY PROTECTION TRUST SUITABLE FOR?
Couples who own property married or unmarried that have children, who main concern is to best protect their children against the death of one of their parents. As you can see from the case studies above protecting children worked perfectly with a PPT.
IS A PROPERTY PROTECTION TRUST SUITABLE FOR PROTECTION AGAINST CARE FEES?
A PPT can be used to give protection against care fees but consideration should be given to the level of protection a PPT will achieve.
CASE STUDY 1
David and Sylvia are concerned about losing their property should they go into care. They want their house to pass to their only daughter June, so decide to take a property protection trust through their Will. They have little savings but the house is worth £200,000. David dies his half of the property passes into the trust to be given to June on the death of Sylvia. Two years later Sylvia is diagnosed with Dementia and goes into care. The Local Authority takes Sylvia’s half of the property to fund her care and June inherits £100,000 her father's half of the property.
CASE STUDY 2
David and Sylvia are concerned about losing their property should they go into care. They want their house to pass to their only daughter June, so decide to take a property protection trust through their Will. They have little savings but the house is worth £200,000. Unfortunately David has a Stroke and is forced to go into care as Sylvia cannot look after him. As Sylvia is alive and living in the property the Local Authority cannot access the property, so his care is free as the savings are under £14,250. Unfortunately Sylvia is then diagnosed with Dementia and also goes into care. Now they are both in care the Local Authority will access them each on their halves of the property, they take David’s half to pay for his fees and Sylvia’s half to pay for her fees, the property is sadly lost June inherits no part of the property.
IS THERE AN ALTERNATIVE?
Yes under the circumstances above David and Sylvia would have been better off with a Family Asset Protection Trust, that would have protected the property providing the FAPT had been taken for legitimate purposes, see our section Family Asset Protection Trust.