Why do I need a Property Protection Trust?

Property Protection Trust: Safeguard Your Family Home

Did you know that the average cost of residential care in 2023 in England, was 54,184 a year? With care costs continuing to rise, this growing financial burden makes it more important than ever to plan ahead and protect your family home. A Property Protection Trust (PPT) is an affordable and effective solution to this concern, allowing you to safeguard a share of your home and legacy for the future. In this blog, we’ll explain how a Property Protection Trust works and why it’s a smart choice for homeowners looking to secure their property and provide peace of mind for their loved ones.

What is a Property Protection Trust?

A Property Protection Trust is a legal arrangement that helps ensure that your share of the family home is preserved for your beneficiaries, usually children, after your death. The trust allows the surviving spouse to continue living in the home for a specific period of time without inheriting it. This legal safeguard protects the deceased share of the property from being used to cover care costs or being altered by the surviving spouse, ensuring your intended beneficiaries inherit it in line with your wishes.

Essentially, the trust ensures that no matter what happens to the surviving spouse—whether they go into care, remarry, or make changes to their will—your share of the family home will still go to the intended beneficiaries, typically your children.

Key Benefits of a Property Protection Trust

A Property Protection Trust offers numerous benefits that provide security and peace of mind for homeowners. Here’s why you should consider setting one up:

1. Protect from Care Costs

One of the main reasons many couples consider a Property Protection Trust is to protect a share of their home from being sold to pay for long-term care. With residential care fees averaging £54,184 annually, many families face the reality that, if one spouse requires care, the value of the family home may be used to fund these expenses. If the surviving spouse has savings above £23,250, they may not be entitled to financial assistance from the local council, meaning they could be forced to sell the property to cover these costs.

A Property Protection Trust prevents this by keeping the deceased spouse’s share of the property protected. That share is placed into the trust, ensuring it stays within the family and isn’t sold to cover care fees. The surviving spouse can continue to live in the home for the rest of their life without risking losing it to pay for their care.

2. Avoid Disinheritance

Blended families—families where one or both partners have children from previous relationships—can often face issues with disinheritance. This is particularly true when the surviving spouse inherits the entire estate and later changes their will to favour their own children, potentially leaving out the deceased’s children. This is known as sideways disinheritance.

A Property Protection Trust ensures that the deceased spouse’s share of the property is preserved for their intended beneficiaries, usually children from the first marriage. The surviving spouse can continue living in the home, but they cannot change the distribution of the deceased spouse’s share of the property. This provides a safeguard against sideways disinheritance, ensuring that the deceased’s children receive their rightful inheritance.

3. Guard Against Remarriage

Another concern for many homeowners is the possibility of remarriage. Under UK law, if a person remarries, any will they previously made is automatically revoked. This means the surviving spouse could change their will to benefit their new spouse or children, potentially leaving out the deceased’s children.

A Property Protection Trust addresses this concern by protecting the deceased’s share of the property. Even if the surviving spouse remarries or changes their will, the trust ensures that the deceased spouse’s share of the property passes to the intended beneficiaries. This gives peace of mind, knowing that the property will remain within the family and be passed down to the children, even if the surviving spouse’s circumstances change.

How the Trust Works

Here’s how a Property Protection Trust works in practice:

Upon the First Death: When the first spouse passes away, their share of the family home is transferred into the trust. The surviving spouse can continue to live in the home but cannot alter the terms of the trust.
Surviving Spouse’s Rights: The surviving spouse retains the right to live in the property for the rest of their life, but they cannot alter the distribution of the deceased spouse’s share of the home. They may not change the trust or give the deceased’s share away to someone else.
After the Surviving Spouse’s Death: Once the surviving spouse dies, the property is passed to the beneficiaries named in the trust. Typically, this will be children or other family members, but the trust can be customized to reflect the wishes of both spouses when drafting the terms of the trust.

Why Plan Ahead?

Setting up a Property Protection Trust now can help you avoid potential complications in the future. Estate planning is essential for protecting your home from being lost to care fees or from disputes between family members. The trust provides a clear plan for what will happen to the property and ensures that your wishes are followed.

1. Affordable Planning

Many people believe that creating a trust is expensive and complex, but a Property Protection Trust is often much more affordable than they think. The cost of setting up the trust is relatively small compared to the potential costs of care fees, legal challenges, or inheritance disputes that could arise in the future. Setting up the trust now can save your family a lot of money and hassle later on.

2. Protect Your Legacy

By setting up a Property Protection Trust, you’re taking control of what happens to your home and your legacy. The trust ensures that your property stays in the family and is passed on to the people you intend to inherit it—usually your children—no matter what happens after your death. This helps protect your legacy and ensures that your wishes are respected.

Final Thoughts

A Property Protection Trust is a simple, effective, and affordable way to protect your family home for future generations. It safeguards your property from care costs, prevents disinheritance, and ensures that your estate is passed on according to your wishes. If you want to protect your home and provide peace of mind for your loved ones, setting up a Property Protection Trust is a smart step in your estate planning.

By planning ahead with a Property Protection Trust, you’re ensuring that your home remains within the family and that your intended beneficiaries inherit it as you wish. It’s a proactive way to protect both your assets and your loved ones, preventing costly disputes and complications in the future.

If you’re considering setting up a Property Protection Trust, speak to our solicitors who specialise in estate planning by clicking the button below. They can help you tailor the trust to your specific needs and ensure that your wishes are legally protected.

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