Property protection. First of all, it is important to understand what causes homes to be seized in the first place. The Local Authority will seize a person’s home to pay for care costs if both of the following are true:-
1) That person is worth more than £23,250 (including the value of their home)
2) If you own 100% of your home (excluding the mortgage)
So, if one of you dies and the survivor inherits the property, then both of the above are going to be true. If the surviving partner goes into Long Term Care, the home can, and will be seized by the Local Authority.
So how do Protective Property Trusts prevent this from happening?
Well, they do so by ensuring that the neither of you ever owns the property 100% outright. On first death, the Protective Property trust states that the first to die does not leave his/her share of the property to the survivor, but he/she does specify that the survivor has the right to live in property the (a ‘Life Interest’ or ‘Right of Residence’).
The survivor only owns 50% of the property
- However, he/she can still live in it, due to the ‘Life Interest’
This simple arrangement means that the surviving spouse never owns 100% of the property. Remember the two conditions that we explained above which must both be satisfied before the Local Authority can seize the property? Well obviously the second condition – that the survivor owns 100% of the home – is not satisfied and so the property is protected: the Local Authority cannot seize it.
The Property Protection Trust within the Will atomically protects your children from any dilution of your estate, this occurs as your surviving children will become 50% owners of your share. This is particularly important in the case of marriage/re-marriage of the surviving partner. It means that your children will not lose out on what is rightfully theirs.
Please note that you will have full control of your home and the Trust will only start on 1st death which means you can sell and move in your lifetime.