Protect Your Assets For Your Family
Talking about making a Will isn’t always easy.
It can be somewhat daunting and it’s understandable why people like to avoid the subject or push it aside. However, death is inevitable and your Will is your legacy that you leave behind when you’re gone.
It’s important to get the right legal advice to protect your interests after your death. Your Will ensures that your assets are distributed according to your wishes, meaning your loved ones will receive inheritance in the way that you would like.
Property Trust Will
In this day and age where receiving care has become a common practice, you could potentially leave your loved one with little to no inheritance.
The traditional concept of having a mirror Will does not provide maximum protection for your inheritance. This is where a property trust Will can help you achieve protection for your assets.
Care fees cost on average between £800 £1,000 per week. Annually, this is between £50,000 - £60,000. Currently, to receive maximum financial support for care fees from the Local Authority, your assets will need to be at a value of £14,250 or below.
If you own a property jointly, completing a property trust Will allows you to ring fence at least half of the value of your property. The terms of the property trust Will would mean that you and your partner would be leaving your share of the house in trust for the benefit of your children and leave a life time interest for your partner to be able to live in the property. This ultimately provides security to your partner, as well as ensuring that in the event of your passing, you have safeguarded your share of the property for your chosen beneficiaries.
It's important the property trust Will is completed when both joint owners of the property are alive. You cannot protect your half if your partner has already died, as the equity of the property would pass over to the surviving partner. If the surviving partner requires care in the future, the full value of the property would be means tested towards care fees.
A property trust Will is the best way to protect your property against care home fees. Although it can’t provide 100% security, it’s the most legitimate and legally recognised way to protect your asset.
Beware of Mis-selling Scandals Asset Protection Trust
There is a misconception that a property trust Will is similar to an asset protection trust. Asset protection trusts are often mis-sold, so it’s important to ensure you speak to a legal professional to avoid falling victim to these mis-selling scandals.
A life-time asset protection trust is where a property has been transferred into a trust, and the trust is effective during the owner’s lifetime. People often spend thousands of pounds setting up asset protection trusts, yet they can be ineffective. These types of trusts can be seen as a deprivation of assets and the local authority can still consider the value of the property when completing a financial assessment for care fees.
A property trust completed through a Will would mean that your family will inherit your share on your death and you have not deprived or tried to reduce your assets from the local authority.
Gifting Your Property
Another common misconception is that you can avoid paying care fees by gifting your home to your family during your lifetime. Again, this would be seen as a deprivation of assets and would be scrutinised by the local authority. Unlike HMRC, there’s no ‘7 year rule’ when it comes to paying care fees. The local authority can go back as far as they wish to check transactions when investigating deprivation of assets.
Gifting your home to your family during your lifetime can create other problems too. If the new owner is in debt, the property could potentially be at risk against the creditors. If the new owner goes through a divorce, the property would be vulnerable towards their divorce proceedings.
I dealt with a client who was a labourer and had worked hard to build his home. When his wife passed away, he was concerned for care fees. It was too late for his wife to complete a property trust Will, to protect her share for their daughter. Without seeking legal advice, my client gifted his home to their daughter and transferred the legal title to her. When their daughter later got divorced, half of the home was lost to her ex-husband, which was very sad and distressing for my client and his family.
Lasting Power of Attorney
Lasting Power of Attorney (LPA) are legal documents to protect your interests during your lifetime.
There are two types of LPA – one protects your Property and Financial Affairs, one protects your Health and Welfare. An LPA allows you to choose someone you trust to make decisions on your behalf when you’re no longer able to, such as paying your bills and outgoings, deciding if your home needs to be sold and the care you receive.
Many people believe that appointing an Executor in your Will means that they can take care of your affairs whilst you’re still alive. Unfortunately that’s not the case. Your Will only comes into effect after you have died.
Making an LPA means that should there be a time when you’re unable to make decisions for yourself, your decisions are not in the hands of strangers, but rather a family member, such as your children, who can make decisions with your best interests in mind.
Without an LPA, your family members may not be able to access your finances, make decisions on your behalf or carry out your wishes as you would have wanted if you had the capacity.
An LPA has to be made whilst you are of ‘sound mind’. People often leave it too late when they no longer have capacity so cannot apply for an LPA. If you lose capacity without an LPA in place, there is a process for applying for a deputyship order from the Court of Protection. However, this is much more difficult, time consuming and expensive compared to an LPA. It could also mean that the person who applies to the court for a deputyship order is not the person you would have appointed as an attorney for yourself.
Putting an LPA in place allows you to be in control of your own financial and health matters by appointing the people you love and trust the most.
Completing both your Will and Lasting Power of Attorneys in advance removes the burden from your family members at an already difficult time. You will have protected your interests on how you would want your affairs to be dealt with.
There’s no ‘one size fits all’ solution, which is why it’s always best to speak to a legal professional.
Nobody can predict the future, but we can help you prepare for it.