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As an estate planner, a frequent question I encounter is: How can I safeguard my property from care home expenses, debt, and remarriage? Allow me to explain this with a real-life example.
Picture this: David and Emily are a couple with two children, living together in their family home. If David passes away, Emily becomes the sole owner of the property. Their wish is simple: they want their children to inherit the house after both of them are gone. However, life is unpredictable, and there are several risks that could arise between their deaths, potentially leaving their children with nothing.
Protecting Your Property from Remarriage
Let’s start with remarriage. Studies show that within 25 months of losing a spouse, 61% of men and 19% of women either remarry or enter a new relationship. If Emily remarries, here’s the issue: marriage automatically voids any existing wills. If Emily doesn’t create a new will and passes away, she would die intestate meaning without a valid will. In this case, the government steps in with a standard formula for distributing assets, which rarely aligns with most people’s wishes. For instance, the first £322,000 would go to Emily’s new spouse, and anything beyond that would be split 50/50 between the new spouse and the children.
Even if Emily updates her will after remarrying, there’s another risk: divorce. With divorce rates among millennials soaring from 19% 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
Now, let’s assume Emily doesn’t remarry. Instead, she struggles with the loss of David, falling into a deep depression. She might stop working, develop unhealthy coping mechanisms, and accumulate debt. Creditors would then look at what Emily owns in her sole name including the family home to settle her 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
Finally, let’s say Emily avoids both remarriage and debt but later requires full-time care. While we often associate care needs with aging, accidents or illnesses can happen at any stage of life. Think of Michael Schumacher, the Formula 1 champion who suffered a life-changing brain injury while skiing. If Emily needs care, the local authority will assess her assets, including the family home, to cover the costs.
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. Whether you need to write a will, set up a lasting power of attorney, or explore a Protected Property Trust, book an appointment with me, Joshua Young. 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.
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