Can I protect my property for my children?
Posted on 6th August 2020
Many people will already be aware of the importance of making a Will, especially for your loved ones after you have died. At MG Legal, our Probate Solicitors see a growing worry among married couples, who are concerned with preserving some of their Estate for their children and grandchildren after they die.
Unfortunately, many couples would not consider the implications of gifting everything to their spouse, which could significantly reduce the amount of inheritance their children and grandchildren will receive. Our team of local Wills Solicitors have explained some of the implications below, and how a Property Trust Will could help to prevent these.
With Property Trust Wills, our local Wills Solicitors can sometimes find that it is easier to explain these types of Wills, and the pitfalls of not having them, using examples.
Example 1
Mr and Mrs Jones' Estate is worth £300,000, made up of property worth £200,000 and £100,000 in savings. They are married, with two children, who are both adults.Like a lot of married coiples, they want to keep things simple, and therefore they leave everything to each other on the first death. On the death of the second of them, their Estate passes equally to their children.Imagine 10 years after their Wills have been drafted, Mr Jones dies. Mrs Jones' Estate is now worth £300,000, having received everything from her husband.A few years later, Mrs Jones is taken into care due to health issues that she has been facing. When assessing her financial situation, the Local Authority explain to Mrs Jones' children that, because she has over the current threshold of £23,250, she will pay for her own care. This is, as an example, £50,000 per year. If Mrs Jones needs 5 years' worth of care before her death, this will cost her £250,000. Her children therefore receive £25,000 each. Many couples may be happy with the above scenario, however, for others, the reduction of their Estate, which they may have worked their whole lives for, would be an issue. One way to protect your share of your property for your children or grandchildren would be to create a Property Trust Will with your spouse. To achieve this, our local Wills Solicitors would include clauses in your Will which puts your share of the property, usually 50%, into a type of Trust when the first spouse dies. Under the Trust, your surviving spouse can live in the property for as long as they want, move house, or even use the income from the capital (i.e. the proceeds of sale) if the property is sold. Until they die, the children or grandchildren do not receive anything. However, if the surviving spouse is taken into care, half of the property does not belong to said spouse. Therefore the Local Authority can not use this share when calculating the fees that must be paid.
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Example 2
Let us take Mr and Mrs Jones again. Before they finalise their simple Wills, our local Wills Solicitors discuss the option of a Property Trust Will. Their Estate is still worth £300,000 between them, however, with the additional Property Trust clauses, when Mr Jones died, his half share of the property was placed into a Property Trust. The remainder of his Estate passes to Mrs Jones. Mrs Jones' Estate is now worth £200,000, with the added benefit of any income generated by Mr Jones' share of the property. In essence, nothing has changed for Mrs Jones, and she is still able to live her life as it would have been, had her husband left everything to her. Now, if Mrs Jones needed care, in this example, the care home would assess her liability based on her Estate being worth £200,000. So, after 3 years in care at £50,000 per year, Mrs Jones' Estate would diminish to £50,000. At this point, based on the current threshol of £23,250, Mrs Jones would only pay for part of her fourth year in care. When her capital dips below the threshold, the Local Authority would review the amount that Mrs Jones pays. After Mrs Jones' assests have reduced to £14,250, the Local Authority would offer the maximum amount of support available. So, when Mrs Jones' dies, her Estate has reduced to £14,250. However, as her husband's share of the Property is in Trust for their children, they both receive £57,125 each - £7,125 from their mother's Estate, and their share of the property which is £50,000 each. Based on this example, Mr and Mrs Jones' children would receive an additional £32,125 each from their parents, as opposed to the first example. For some married couples, this would be their preferred option to ensure that their hard work is preserved, as much as possible, for their children, rather than being used for their spouse's care home fees.
Get Legal Advice
To discuss Wills, or including Property Trust provisions in your Wills, you should always seek legal assistance to get advice from our expert local WIlls Solicitors about your individual circumstances. Give us a call at your local office to arrange an appointment, or contact us online for a call back within one working hour.
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