Asset Protection Trusts

What is a trust?

A Trust is a way of managing assets and can be created during someone’s lifetime or on their death. There are three parties involved with creating a Trust, the Settlor, the Trustee and the Beneficiary. The Settlor (original owner of the assets and the person setting up the Trust) will transfer their assets to the Trustee (the person or persons trusted to look after the assets) and be required to hold and manage these assets on behalf of the Beneficiary (the person or persons the Settlor would like to benefit from the assets). A trust can be useful when the Settlor would prefer not to gift their assets outright to their Beneficiary.

All the terms, conditions and details are outlined in a Trust Deed created by the Settlor.

What is an Asset Trust

A Will can only help you dispose of assets you own upon your death. A Trust allows you to ringfence your assets while you are alive. Trust is there to prepare for the unexpected, or should you ever lose mental capacity, it is protected.

Most people choose to protect their home with a Property Protection Trust (PPT) but you can protect your savings and other assets too. Did you know any income from savings protected within a Trust can be paid directly into your bank account to supplement the income from earnings or pensions?

Think of a Trust as a virtual safety deposit box; assets can be added and removed from the Trust during your lifetime. You are named the 'Principal Beneficiary' to have complete control of what happens to the items kept within the Trust. So what do you do if you need access to the asset?

For example, if you want to buy a new car, a holiday, a new home or help the grandchildren but can't do it from your ordinary income, you can have the funds transferred to your normal account from the Trust.

If you have significant expenses that cannot be met out of normal income, like a new car, holiday, or house repairs, the appropriate sum can be transferred to your bank account from the Trust.

You are also free to move home or release equity from the Trust at any time. You appoint the trustees too, so you remain in control at all times. You can even direct the Trustees to sell your property and buy a new property of your choice.

If you want to know more, just give me a call, it is not as expensive as you think and can save you and your family 1000's

How do Property Protection Trusts Work?

When either partner passes away, their share of the property will be put into a Trust.

The Property Protection Trust is included in both your and your partner’s Will and only comes into effect on death. A PPT means that you and your partner will continue to own your property in the usual way during your lifetime. On the death of either you or your partner, the Trust will take effect, and the share of the property belonging to the deceased person will be put into a trust to be managed by your Trustees for the ultimate benefit of the named Beneficiaries. Provisions are contained within the Trust to ensure that the surviving partner has the right to continue living and benefitting from the property during their lifetime.

Putting a share of the property in Trust ensures that at least one share of the property is protected during the surviving partner's lifetime and cannot be included as part of their estate by potential creditors, including when assessments are made for residential care home fees.

When the surviving partner passes away, the Trust comes to an end, and the share of the property in Trust goes to your chosen Beneficiaries.

What are the Benefits?

Typically, when a couple owns a house together and one partner dies, their share passes to the surviving spouse. Whilst at first glance this would appear practical, there may be many reasons why you would want to consider gifting your property differently;

• You may wish to make provisions in your Will to ensure that your share of your property will ultimately pass onto your children. These provisions can be especially relevant if you and your partner have children from previous relationships.

• You may wish to safeguard your share of the property against any future creditors that your partner may have, for example, local authorities, should your partner require residential care.

• You want to ensure that your partner does not inherit your share of your property and then make changes to their Will after your death to benefit other people you may not wish to. This is often referred to as sideways disinheritance and can happen unintentionally if your partner remarries after your death.

Question?

Send me a message