A Protective Property Trust (PPT) is a legal addition that is included within your Will. The trust ensures that your estate, namely your family home, will be safe and will be given to the right people when you die. If you asked the majority of people what would happen to their assets and their estates when they die, they would be likely to tell you that they think that it would pass down to their children or their other close relatives. Despite this being a common misconception, the truth is that this is not always the case. To protect your estate, you have to make careful arrangements.
Lots of couples make basic mirror Wills and leave everything to each other, and then to their children. What people don’t realise is that when one of them dies, what happens in the remainder of their partner’s life can radically affect the inheritance their children eventually receive.
Many people don’t realise existing Wills are revoked by marriage. If the surviving partner re-marries without making a new Will then their new spouse, and not the children, could inherit everything.
Family conflict is also unfortunately common, and later Wills could cut out the intended original beneficiaries altogether. Even without re-marriage, the survivor’s care fees, bankruptcy, or other debt could use up all of the remaining money.
This is why arranging a protective property trust is so important. When you have PPT, you are protecting your family home from the events that may happen after your death and ensuring that your share of this asset passes to the beneficiaries that you choose.
A protective property trust allows you to provide for your spouse or partner for the remainder of their lifetime whilst ensuring your children’s inheritance is protected from events that could happen long after your death.
HOW DO THEY WORK?
A Protective Property Trust covers a jointly owned home (for example, if you have a home with your partner). If one partner were to die, the trust enables the survivor to continue living in the property (or even move to another property if they need to) but at the same time protects the asset for the final beneficiaries. This means that the surviving partner (and any children that they are still living with at the time) can feel the benefit from the share of their partner, even though they are not around. If the surviving partner needs to go into a care home before their death or if they decide to re-marry, then the share of the property belonging to the person who died first is protected for their chosen beneficiaries
John and Sarah want to protect their children’s inheritance and have peace of mind. Their home is their most valuable asset. They make Wills, including a protective property trust and leave the remainder of their estates to each other. They each have a share of the property to give to their children, at the same time as giving rights to the survivor of them. The survivor can continue to live in the property and, depending on the conditions set out in the trust may upsize or downsize.
If, when the survivor sells the property there is a surplus, the trust can also set out what should happen with the surplus, for example it can be used to provide the surviving partner with an income, or it could go directly to the children immediately.
If John were to die first, his chosen trustees make sure the property is protected and the terms of the trust are kept. This means John’s share of the home is protected for the children even if Sarah remarries, makes a new will, or owes money to others. Sarah continues to live at home and has rights set out in the trust. The trust ends on Sarah’s death and the children inherit John’s share of the property. If Sarah hasn’t remarried or made a new Will and still owns the property, the children can also benefit under the terms of Sarah’s Will.
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