Property Trust Will
Most people know how important making a will is for you and your loved ones. At Simply Wills and Powers of Attorney our Will Writers are seeing a growing trend in couples concerned with preserving their wealth for their children and grandchildren after they die.
Unfortunately many couples aren’t aware of a potential trap that can significantly reduce the amount their children and grandchildren could inherit. We explain this trap and how a Property Trust Will can help to prevent it.
It’s best to illustrate the problem with an example:
Let’s take Mr and Mrs Jones. They are married with an adult child and are both 70 years old living in England. They own their house worth £150,000 and have savings between them which are worth £50,000.
When they wrote their Wills, they wanted to keep things simple. Their Wills say that when one of them dies, everything passes to the survivor. Then, when the survivor dies, everything passes to their only child. This is a common arrangement for married couples with children.
Now let’s fast forward 5 years. Mr Jones dies and, in accordance with his Will, his Estate passes entirely to Mrs Jones. Mrs Jones has all the assets transferred into her sole name including their family home. Mrs Jones now has assets worth £200,000 in her own right.
Now let’s fast forward another 2 years. Mrs Jones is struggling with her health and the practicalities of running her home by herself. She suffers a fall which leaves her unable to manage her affairs. Whilst her adult child offers support, he can’t look after his mother on a full time basis. Mrs Jones has to move into a residential care home.
Mrs Jones has her needs and finances assessed by the Local Authority. Because Mrs Jones has more than £23,250 she has to pay for her own care home fees. The cost of the care home is £30,000 a year. Mrs Jones stays in the care home for 5 years until she dies, so the total cost amounts to £150,000.
Because of the cost of the care home, the value of Mrs Jones Estate reduces from £200,000 to £50,000 and her son receives an inheritance of £50,000. For some couples this scenario is fine, but for many couples it won’t be. There is a desire among many people to try and protect as much of their wealth as possible from being used for care home fees.