An Ultimate Guide on House Protection Trust

Setting up a house protection trust is one technique of estate preparation. However, there are drawbacks to this, and you should think about them before paying for such a trust.

What is a house protection trust?

This is a trust that safeguards your right to live in your family home. A trust ensures that your home is passed on to your beneficiaries, which are typically your children.

This may avoid the complexities of probate, as well as the council assessing the home's value for care facility payments. Furthermore, the property under the trust will not be considered part of the settlor's inheritance when they pass away.

As a result, the trust property will not be included in the inheritance tax assessment. Property protection trusts and asset protection trusts are also terms used to describe these trusts.

How do house protection trusts work?

Wills trusts, not lifetime trusts, are used to protect your home. While you are still living, you and your spouse should convert your home's ownership to tenants in common rather than joint tenants.

When you die, your home is transferred to your trustees, who keep the property on behalf of the beneficiaries, who are usually your children.

After your death, the trust agreement will include a provision allowing the surviving spouse to reside in the property for the remainder of their life.

The assets in the trust will be dispersed to your beneficiaries after they pass away. There will be no need for a grant of probate.

Who should think about forming a home protection trust?

Home protection trusts are ideal for couples or partners who have a significant amount of their assets in the form of real estate or a family home.

This form of trust is especially beneficial if you are concerned about long-term care costs and want to ensure that your children receive at least half of the value of your home.

One advantage of this arrangement is that your partner or spouse can continue to live in the house and benefit from it after you die.

Is it legal to set up a property protection trust?

Yes, but you couldn't have set up the trust to avoid having to pay for care on purpose. This is referred to as "asset deprivation."

The council has a lot of leeways if they look at the background of the trust's formation and believe it was set up to avoid paying for care.

In any case, this may entail appraising the property for care costs. As a result, if your spouse already had health problems when the trust was established, this is most certainly planned deprivation. As a result, it is important to acquire legal assistance; otherwise, your efforts to establish a trust could be for nought.

Is it a good idea to set up a family protection trust?

For your unique case, you should get legal counsel. To ensure that the trust's goal is met, you should pick someone who is knowledgeable in the legal field.

Recently, there have been cases in the headlines when a solicitor or adviser failed to disclose to their client the trust's restrictions and risks, resulting in the trust being worthless but costly.

What does it mean when you put your house in trust?

When you own a home, you usually have both legal and beneficial ownership rights.

When you put your home in trust, the legal and beneficial ownership of the property is split, with the trustees having legal ownership and the beneficiaries having the right to enjoy it.

When you put your house on trust, you technically no longer own it, but the trust agreement states that you can continue to live there. The trustees will have control of the property, though the settlor is generally a trustee too, so you can still determine what happens to your assets.

The asset will be distributed among beneficiaries as specified in the trust document after your death.