minimising estate liabilities, pay less

Private Property Trust

By simple definition the Private Property Trust (PPT) helps to protect a share of a property. You may want to do this to pass down your share of the property to future generations and it’s a great way to prevent sideways disinheritance or help protect your assets from third parties.

Sideways disinheritance is common where a married couple, each with children from a former marriage, don’t protect their share of the property. They might for example have mirror wills leaving everything to their spouse. Then what happens is that the surviving spouse changes their will after the death of the partner, often in favour of their own children, therefore disinheriting their step-children.

A PPT allows you to protect everyone’s needs and is probably one of the most common trusts in existence. The trust is included in your Will and would be managed by trustees specified in the Will. A PPT will protect the needs of the surviving spouse by giving them a life interest in the property. After they have passed away, the trust ends and the share in the property goes to your chosen beneficiaries.

This will look after the needs of your surviving partner as well as your beneficiaries by securing their inheritance and ensuring that your partner has the right to live in the property for the rest of their life.

It may also have the effect of protecting your share in the property should your surviving partner require residential care, meaning the whole house cannot be used as collateral to fund it.

Disabled & Vulnerable Persons Trust

This type of trust is used where a testator (the person who’s Will it is) wants to provide for a beneficiary or beneficiaries who may not be able to manage assets themselves. Examples include someone with a physical or mental disability, or someone who suffers from substance abuse.

These beneficiaries may be unable to manage large sums of money themselves and the trust will give discretionary power to the trustees (people appointed to manage the trust) to drip feed money in, as and when it’s needed. This means that those that suffer from substance misuse will not squander the money, and those needing care will have money when needed.

These trusts are set up by your executors and managed by your trustees. These may be the same people.

Family Asset Protection Trust

There are other types of trusts which can be set up during your lifetime for the benefit of ring-fencing the assets. These are often referred to as Asset Protection Trusts. These trusts can handle money, capital investment bonds and also property.

Making the decision to transfer your home into a trust is a big one. There are important questions that need to be addressed to ensure it’s right for you. Our advisers will be able to help and will suggest a better alternative if one is available.

Your home is often your biggest asset and you will undoubtedly want to protect it for future generations. Putting it into trust is a process whereby you hand over the title of the property and it is placed in the names of the trustees meaning you no longer own it. You still have a right to live in the property (right to occupation), and it can still be sold if you need to move for example, but the trust is managed by the trustees in accordance with the Trust Deed (which outlines the rules and conditions of the agreement).

The advantages of setting up an asset protection trust are that it can ring-fence your assets, protect personal assets from unforeseen business debts, protect assets against sideways disinheritance, and may mean that due to the size of your estate, it can save time and prevent hassle for your executors when dealing with your estate administration. It could also possibly result in reduced probate costs.

These sorts of trusts can protect assets from third party creditors, provide discretion for your trustees and it may also protect the property against care fees. It should be noted that this cannot be the sole reason to set up a family asset protection trust. To do so is known as deliberate deprivation and under such circumstances, the local authority can take this into account when means testing your estate.

Other benefits of creating an asset protection trust include preserving assets for future generations. However in relation to the family home it is important to note that a Family Asset Protection Trust is not an inheritance tax saving scheme.

Clearly there’s a lot to take in, so why not give us a quick call on 0330 8080 453 or contact us to see what we can do.