.jpg){kind=small}
As an estate planner, I often get asked, How can I protect my property from care home costs, debts, and remarriage? Let me share a real-life example to illustrate this.
Imagine this: David and Emily, a devoted couple, share their lives with two children in the comfort of their family home. Upon David's passing, Emily will inherit full ownership of the property. Their desire is straightforward: they wish for their children to receive the house once they are no longer here. Life is full of uncertainties, and various risks may emerge between their passing, possibly leaving their children with nothing.
Protecting Your Property from Remarriage
Let's dive into the topic of remarriage. Research indicates that within 25 months of the loss of a spouse, 61% of men and 19% of women find themselves remarrying or starting a new relationship. If Emily decides to remarry, there’s an important consideration: any existing wills will be automatically voided by the new marriage. If Emily fails to create a new will and passes away, she will die intestate, which means she will not have a valid will in place. The government intervenes with a conventional formula for asset distribution, often falling short of the preferences of the majority. The initial £322,000 will be allocated to Emily’s new spouse, while any amount exceeding that will be divided equally between the new spouse and the children.
Even if Emily updates her will after remarrying, there’s another risk: divorce. With divorce rates soaring to 42%, the family home could become entangled in a divorce settlement, leaving the children with less—or even nothing.
Protecting Your Property from Debt and Legal Claims
Let’s consider a scenario where Emily chooses not to remarry. Instead, she grapples with the absence of David, sinking into a profound depression. She could cease her employment, adopt detrimental coping strategies, and rack up financial obligations. Creditors would assess Emily's assets held solely in her name, including the family home, to resolve her outstanding debts.
Even if Emily recovers, life is full of unexpected events. Imagine she accidentally injures someone, and they decide to sue her. In such cases, the claimant would target assets held solely in Emily’s name, including the family home.
Protecting Your Property from Care Home Fees
Let's say Emily avoids debt and remarriage, but she subsequently needs full-time care. Although most people link care requirements with ageing, accidents or diseases can strike anyone at any stage of life. Consider Michael Schumacher, the Formula 1 champion who skiing resulted in a life-changing brain damage. Should Emily require care, the local government will evaluate her assets—including the family house—to help to meet the expenses.
The Solution: A Protected Property Trust
So, how can you safeguard your property from these risks? The answer lies in a Protected Property Trust. Think of it as a secure container for your share of the property. When David passes away, instead of Emily becoming the sole owner, David’s half of the property is placed into the trust. This ensures that:
- Remarriage: If Emily remarries and forgets to update her will, David’s half of the property remains protected for the children. Even in the event of a divorce, the trust ensures the children’s inheritance is secure.
- Debt and Legal Claims: Creditors or claimants cannot access David’s share of the property, as it’s held in trust. Emily’s ownership is limited to her half, making it harder for external parties to claim the home.
- Care Home Fees: The local authority cannot include David’s share of the property in their financial assessment, as it’s protected within the trust.
How It Works
The trust allows Emily to retain control and use of the property as a life tenant. She can continue living in the home rent-free, move to a new property if needed, and even act as a trustee to maintain oversight. This setup ensures Emily’s quality of life remains unchanged while safeguarding the children’s inheritance.
Take the Next Step
If you’re ready to protect your family’s future, I’m here to help. Make an appointment with me, Joshua Young, if you need assistance with writing a will, setting up a lasting power of attorney, or exploring a Protected Property Trust. I’m a will writer serving Farnborough, Basingstoke, Camberley, Aldershot, and the surrounding areas. Let’s work together to ensure your loved ones are protected, no matter what life throws your way.
Comments