Candid Wills will take the time to understand your circumstances, your concerns and your requirements. We will listen to you and guide you through the process of creating a valid Will that meets your needs – whether something simple or a more comprehensive solution is required.
Everyone’s estate planning needs vary. With this in mind, it may be that a Foundation Will is not sufficient for your needs, for what you want to accomplish or for the financial make-up of your estate. In such instances, we may recommend one of the following types of trust to help accomplish what you are wanting or need. In short, a trust is like a safety deposit box and holds assets securely.
Inheritance Tax Trust
This trust is suitable for couples who are not married and whose estate is over the Inheritance tax threshold – currently £325000. This trust includes a detailed Expression of Wishes document.
Flexible Life Interest Trust
Combines a protective Property Trust and a Discretionary Trust. This trust can help to protect your assets from the care home fees, the possible divorce and the possible debt of your beneficiaries, plus much more.
Right to Occupy Trust
This trust allows someone - a child or an aged parent for example, to live in your property for a set period of time following your death. This may be beneficial if for example a child lives with you and you don’t want them to suddenly be homeless upon your death. This trust would allow them to remain living in your property for a set period of time perhaps 2 years following your death to allow them time to decide what they are going to do and get organised. After the 2 years, the property would then be sold and at that time the named beneficiaries would receive their share of the equity in the property.
Protective Property Trust
This trust guarantees that your children inherit even if your surviving spouse/partner changes their Will, remarries or re-cohabits following your death. This trust also provides substantial savings in relation to care home fees. Our work includes severance of tenancy advice.
Discretionary Trust
These trusts are suitable if you wish for someone to benefit from an inheritance, however they may not be able or suitable to handle the money for themselves and it would be best for the money to be handled and cared for by trustees for the benefit of the beneficiary. Example 1 – Disabled person – if a person is on means tested benefits and not able to care for themselves then they would not lose those benefits on your death if their inheritance is placed in a Disabled person’s discretionary trust. The trustees would utilise the money as they see fit e.g. for holidays, clothes etc. for the benefit of the disabled person – Example 2 - Substance dependent child- The trustees could ensure the money is only used for purposes they feel you would be happy with. Example 3 – Protecting your wealth from the future divorce, debt or care fees of your children. There are many other situations where this type of trust may be appropriate. Expression of Wishes is included with this trust for you to offer guidance to the Trustees as to how you would like the money in the Trust fund using.
Business Property Relief Trust
This trust allows you to protect your share of the assets in your business from being subject to inheritance tax charges. It can also have many other positive benefits for your share in the business. We can discuss these benefits on a case by case basis if they apply.
A Protective Property Trust is probably one of the most common trusts to be incorporated in a Will, so let’s look deeper at the 2 main benefits of this trust……
PROTECTION FROM CARE HOME FEES!
FACTS REGARDING CARE HOME FEES:
The government set up charges for care for the elderly and the harsh reality is that the government further drafted the National Health Service and Community Care Act 1990 in the knowledge that attempts to circumvent it would be made, and so they guarded against them. The local authority is empowered to disregard, without limit of time, any transaction that they consider as “self deprivation” or purposefully depriving oneself of an asset or assets, to avoid paying care fees.
What if I give my home to my child?
Any change that transfers the ownership of your home, robs you of your security and can result in disaster.
Giving your home to a child, is often quoted as being the ideal solution, BUT –
a. Gifting the property, but continuing to live in it, is not a “true gift” in law unless you pay a full market rent.
b. From the date of the gift, it will not be the primary residence of the owner, and will therefore qualify for Capital Gains Tax on any increase in value.
c. If your child becomes involved in bankruptcy, your house will be one of their assets to be claimed in the legal proceedings.
d. If your child dies before you, your house will be part of their estate and go to their beneficiaries.
e. If your relationship with your child breaks down, your ability to remain in your house would be prejudiced.
f. Income Tax on the rental value of your house will be payable every year.
g. Should your child go through a divorce, your house could form part of their divorce proceedings.
Clearly, these factors make gifting a very risky and expensive affair, particularly as only one in six of us actually go into care.
However there are steps that you can take, which are perfectly legal, and severely limit the amount that can be levied upon by the local authority.
HOW DOES THE PROTECTIVE PROPERTY TRUST PROTECT MY HOME FROM CARE HOME FEES?
We adjust the ownership of the house to a Tenancy-in-Common, so that husband and wife own one-half each. Then each Will gives the deceased’s half of the house to a Protective Property trust which permits lifetime occupation by the survivor.
Sample Scenario: The assessable value is limited to half of the house, less the minimum threshold that you are entitled to. As an example, in the case of a house worth £100000, the effect (in round figures) would be:
Without With
Provisions Provision
Property Value £100000 £50000
Less threshold £20000 £20000
Maximum Levy £80000 £30000
In the example, this, perfectly legal and acceptable procedure saves the eventual beneficiaries £50000 and carries none of the risks associated with other schemes.
Candid Wills will be happy to give a fuller explanation of these issues to you upon request.
ARE YOU SURE YOUR CHILDREN WILL INHERIT?
A Protective Property Trust guarantees that your children will inherit, no matter what may happen after you die!
Sample scenario:
Mr and Mrs Robinson set up a Will to provide for each other and then their two children. In the course of time Mr Robinson dies leaving Mrs Robinson to inherit according to the terms of the Will. Sometime later Mrs Robinson meets someone and remarries. The 2 children, the former Mrs Robinson and her second husband live very happily but unfortunately in time the former Mrs Robinson dies.
This typical story usually has one of two endings:
1) Mrs Robinson made a new Will leaving the marital home to her second husband with a small amount to the children.
2) Mrs Robinson fails to produce a new Will after her second marriage with the result that the majority of the inheritance is taken by her second husband under the Laws of Intestacy and her children lose out.
The reason Mr and Mrs Robinson made a Will in the first place was to care for each other and then to pass their hard earned wealth to their children. Why then did this not happen, even though they had made a Will? How can I protect this from happening to my estate?
Severance of tenancy:
Most couples own their home as ‘Joint tenants’. This means that if one joint owner dies the survivor would own the total value outright irrespective of what might be written in a Will. The alternative is ‘Tenancy in Common’. This means that each party owns a share of the property and can deal with it as they wish. The difference with this arrangement is that your children would be guaranteed to inherit at least some of the value of your home. This arrangement will also protect your share of the family home if your partner were to later remarry. A Property Trust incorporated within your Will would guarantee a right of residency to your spouse thus taking care of her/him but would not allow your share of the home to be passed to anyone other than your children.
Sample scenario revisited: So let’s tell the story of Mr and Mrs Robinson again:
Mr and Mrs Robinson request Candid Wills to sever the tenancy of their home and make them ‘Tenants in common’. Mr and Mrs Robinson each make a Will incorporating a Protective Property Trust to provide for each other and then their two children. In the course of time Mr Robinson dies leaving Mrs Robinson to inherit according to the terms of the Will. Sometime later Mrs Robinson remarries and she, her two children and her second husband live happily. Finally though, the former Mrs Robinson dies.
This story only has one ending:
Mr Robinson’s Will, was planned carefully and professionally and thus gave his wife a life interest in his share of the property. This was to ensure she was taken care of during her lifetime, which she was. When she passed away his Will stated that his portion was to revert back to his children, to ensure his children would always inherit which is what happened. Everything went according to plan, and the beneficiaries received what Mr and Mrs Robinson intended them to.
As shown above the protective property trust helps to ensure that your children inherit, despite what may happen after you pass away and also helps to protect your property from care home fees.
Contact us today and we can guide you through your individual estate planning needs. We will guide you in a simple and straightforward manner. We will offer honest, reliable and clear advice you can trust and all tailored to your personal circumstances, and all at an affordable price!
What type of Will do I likely need?
We provide a free assessment of your needs. This is usually provided as a telephone based discussion, but can be provided via a face to face appointment if you prefer. This free assessment allows you the opportunity to ask all the questions you want to ask about making a Will and allows us the opportunity to identify what your needs are. This places you in the best position to make the right choices for your loved ones. Through this service we are able to offer you a realistic idea upfront of what you require and a realistic price upfront for how much it would be if you chose to follow through on the advice you’re given. Naturally if nothing other than a Foundation Will is needed then nothing further will be recommended. No matter what advice we offer, if a foundation Will is all that you want then that is your choice, but we’ve placed you in a fully informed position, whereby you can decide what level of protection you want to provide for your loved ones and your assets. Whether you then proceed and book a Will appointment with us or not is completely up to you.
This service forms part of our commitment to be honest, upfront and clear in all aspects of our advice and service, including our prices. At Candid Wills we’re always putting your peace of mind and your family’s future security at the heart of all we do!
Our price is an affordable one to protect your family and provide peace of mind.
What happens if you don’t have a Will?
How can we support you?
Evening appointments
We come to your home
Free assessment