Trusts

Protecting Your Assets

Will Writing East Kent offers a variety of trusts that can be incorporated into your will to ensure that your assets continue to be protected after your death.

Protecting your assets if you go into care

Sadly, many elderly people will need formal care during their lifetime, with more than 400,000 people currently living in residential care. Under the Care Act 2014, if a person is taken into care, the Local Authority can use the value of the home owned by that person to fund his or her own care. This could ultimately mean that when the person dies, there is very little of their estate left to be given to their family.

To mitigate such circumstances, it is permissible for both spouses to make use of a Property Protection Trust. By ensuring that the property ownership is held by the spouses as tenants in common, each spouse can then make a provision in their will to “sever the tenancy” and allow each spouse to put their half of the property into a Property Protection Trust for their intended beneficiary(ies). This half of the property is then safeguarded for the family making sure that at least some of the estate is passed on to the children and is not available for the Local Authority to include during the financial assessment for care fees

What happens if I re-marry after the death of my spouse?

If you remarry after the death of a spouse and do not update your will, your estate may become subject to “sideways disinheritance”. Essentially, this means the estate you built up with your former spouse passes to the family of your new one. In some cases, this can even mean the disinheritance your own children!

This is because marriage revokes all earlier wills and, if not updated, your will can be deemed invalid, whereupon your estate becomes subject to the Law of

Intestacy.

A Property Protection Trust or a Flexible Life Interest Trust can be used to prevent the above scenario by ensuring that your intended beneficiaries still inherit your estate.

I live with my partner but we are not married. What about Inheritance Tax?

Inheritance tax is a tax which is paid on the value of all you own when you die. The threshold above which you must pay 40% tax is currently £325,000 (known as the Nil Rate Band). Using a simplified example, if your estate (everything you owned at the time of death, including your house value) was worth £425,000 then you would have a taxable estate of £100,000. This would give rise to a tax bill of £40,000 and therefore less money going to your loved ones.

 

The inheritance tax threshold for a married couple is £650,000 for the current tax year, providing they leave everything to each other on following the death of one of the spouses. In addition, a new additional allowance, called the Residence Nil Rate Band, may provide an additional amount to increase the threshold for married couples.

However, the tax system doesn’t help couples who are not married, and it doesn’t help those who don’t want to leave everything to their surviving spouse.

If you are an unmarried couple, you could benefit from the inclusion of a Nil Rate Band Discretionary Trust in your Will to allow your partner to make use of your £325,000 allowance.

The rules involved in inheritance tax are complex and it is for this reason alone it is important to discuss your situation with an APS Associate, as only then will you be able to understand its potential effects on you, whether your loved ones will lose out on some of their inheritance and, more importantly, what can be done through APS to reduce or even eliminate its effects.

Other Trusts available include:

  • Childrens’ Trust
  • Discretionary Trust
  • Disabled Persons Discretionary Trust
  • Asset Protection Trust (Lifetime)

For more information or to book your FREE will review, call Jim Gregory, at Will Writing East Kent today on 07712 672658 or 01304 614956. Alternatively, fill in the callback form on this page.

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