Protective Property Trust
At Paradigm, we can set up a PPT (property protection trusts) providing both homeowners are alive and hold property as ‘Tenants in Common.’ This is when both partners own undivided interest in the property, which becomes part of an estate when one dies (although this fixed percentage or proportional financial share of the property can vary).
Why would you not leave your surviving partner your share of the estate?
Control over ownership is particularly common if you or your partner have children from previous relationships. You can leave your share of the estate to your children or chosen beneficiaries, and they will receive the inheritance after the death of your surviving partner.
What about if you are the surviving partner and want to move house?
What happens when both partners pass?
The trust ends when the surviving partner passes away, and the property is left to the named beneficiaries in the will.
Let’s look at an example:
Mr and Mrs Smith are joint homeowners who have both previously married and divorced. Mr Smith has two children from a previous marriage, and Mrs Smith has one. They also have one child together.
Without a Protective Property Trust
What we recommend
To prevent this situation, Paradigm would help Mr and Mrs Smith to create a Mirror Will with a Protective Property Trust and sever the tenancy if needed. This measure ensures that the property ownership is divided in half, with both partners owning a fixed 50% of their property. In the will, we would create a ‘life interest’ for both partners, so rather than inheriting each other’s share, they would only give a full life interest to the surviving spouse.
With the trust in place
When do the children receive the inheritance?
Mr Smith’s children will only receive access to his trust upon the passing of Mrs Smith. Then, all beneficiaries will inherit according to the instructions of the will. Again, if Mrs Smith did meet a new partner or required residential care with the Protective Property Trust, Mr Smith’s half of the estate would be ‘ring-fenced’ (separated and protected) and, therefore, untouched.
Why Consider a Protective Property Trust Will?
A protective property trust will offers several key advantages for those looking to manage their estate effectively. Here are some reasons why you might consider setting up one:
- Safeguarding Beneficiaries: One of the primary benefits is ensuring that your share of the property is protected for your chosen beneficiaries. This is particularly important in blended families where you want to make sure your children from previous relationships receive their intended inheritance.
- Preventing Automatic Transfer: Without a property protection trust, your share of the property would automatically transfer to the surviving partner under the right of survivorship. This trust allows you to designate who will inherit your share, thus retaining control over your estate.
- Flexibility for the Surviving Partner: The trust provides flexibility if the surviving partner needs to move house. The proceeds from the sale of the original property can be used to buy a new one, with the trust’s terms continuing to apply. This ensures the protection of your share while accommodating the surviving partner’s needs.
- Clear Distribution of Assets: By specifying your wishes in a protective property trust will, you reduce the likelihood of disputes among family members. The trust provides clear instructions on how your share of the property should be handled, ensuring a smooth transition
With our continued support, we free you from the burden of worry and provide you with peace of mind that your assets will be inherited by your loved ones when you are no longer here.
At Paradigm Wills and Legal Services, we genuinely care about educating people on the importance of making a lasting power of attorney in Leicester. In an industry often loaded with complex legal jargon and a conveyor-belt mentality, we provide a paradigm shift in how we offer our wills services. We aim to supply fresh ideas, clear and straightforward explanations, and a service tailored specifically to you. With you at the centre, we strive to make the will writing process as transparent as possible.
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Our team of seasoned legal advisors is always available to offer comprehensive support and expert advice. Whether you're looking to draft a will, establish a trust, navigate the complexities of applying for probate, or arrange for prepaid funeral plans, we've got you covered. Our goal is to simplify these processes for you, ensuring clarity and peace of mind every step of the way.
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