What is a Property Trust Will and why should you consider one?

Planning for the future is essential when it comes to protecting your assets and ensuring your loved ones are provided for if anything should happen to you. One way to preserve your wealth for your family in the event of your death is the use of a Property Trust in your Will, which could make a big difference to the inheritance you are able to leave behind to your children and grandchildren.

In this blog, solicitor Gareth Morgan from our private client team explains how a Property Trust in your Will works and the potential benefits it offers you if you own property in Northern Ireland.

Why should you consider a Property Protection Trust in your Will?

Most couples in Northern Ireland own property as joint tenants, meaning that irrespective of what is stated in their Wills, the property will always pass to the surviving joint owner. Although this may sound ideal on the face of it, this could lead to potential issues for your children’s inheritance should the surviving spouse or partner remarry or require nursing care later in life.

The following issues may arise in the absence of a Property Trust in your Will:

Remarriage

Should your surviving spouse remarry after your death, their previous Will made during your lifetime may be revoked. This may mean that their new spouse could inherit your property through a new Will or through the laws of intestacy and therefore could result in your children missing out on their inheritance of your share of your property.

Children from previous relationships

If both you and your spouse or partner have your own respective children from previous relationships, you will need to ensure your Will and estate planning protects your children’s inheritance. If your share of your property passes to your surviving spouse or partner, they could change their Will after your death, cutting out your children from their inheritance.

Care home fees

In Northern Ireland, if a property owner requires long-term residential care, there will be a financial assessment carried out to determine whether the individual has to privately pay for their care. If the value of their assets is determined to be above £23,250, they will be deemed to be privately funded and will be required to pay for their own care until their assets fall below the £23,250 threshold.

Therefore, should the survivor of you require care, the full value of your property will be assessed to pay for your care until the value of your assets has fallen below the £23,250 threshold. As nursing care home fees in Northern Ireland are currently between £40,000 – £50,000 per year, your children could ultimately inherit very little depending on how long you require care.

How a Property Trust can help

A Property Trust is a legal arrangement which provides the opportunity to navigate these issues, allowing you to protect your share of your property from future events after your death, ensuring your share of your property is ultimately safeguarded for your children.

With a Property Protection Trust in your Will, instead of your share automatically passing to the survivor of you, your share of your property is placed into a trust after your death, giving your partner a life interest in the property. This means that your partner or spouse can continue living in the property for the rest of their life, while the ultimate ownership of your half share is preserved for your chosen beneficiaries.

Should your surviving partner change their Will or require long-term residential care, your share of your property will be safeguarded within the trust created on your death and will therefore always be protected for your children.

The Trust will only come into effect after the first of you passes away. The trust will not protect against the event of you both going into care at the same time, however statistically this would be very unlikely.

How does a Property Trust Will work?

A Property Trust in your Will typically involves the following steps:

Property ownership as tenants in common – you and your spouse or partner must own your property as tenants in common rather than as joint tenants, meaning that you each have a distinct ownership share that can be passed on by your Will. If your property is currently held as joint tenants, we can prepare the necessary documents to change the ownership of your property to tenants in common in equal shares.

Preparation of Property Trust Will – a new Will will need to be prepared for each of you which includes the Property Protection Trust.

Creation of the trust – the Trust will only be created upon the first of you dying. After first death, the deceased’s share of the property is placed into the Trust, usually a life interest Trust, rather than passing directly to the surviving spouse.

Life interest – the surviving spouse or partner still has the right to live in the property for the rest of their life or until they move into residential care, however they do not own the deceased’s share outright.

Downsizing or moving property – as the Trust will provide a life interest, the surviving partner or spouse will be able to downsize and move property should they wish. A share of the new property can still be held by the Trustees to safeguard this for the beneficiaries of your Trust.

Ultimate beneficiaries – when the surviving spouse passes away or moves into long-term care, the property share held in Trust passes to your named beneficiaries and ensures they will have inherited at least half the value of your property.

Is a Property Trust Will right for you?

For most people, their property is their main asset that encompasses the wealth they have built up throughout their lives. As such, this is the main asset they would hope they can protect in order to ensure this passes on to their loved ones after their deaths.

A Property Trust Will can help you ensure that at least half the value of your property is preserved for your loved ones while also still providing for your spouse or partner. Given the complexities of inheritance laws in Northern Ireland, professional legal advice is strongly recommended to tailor the arrangement to your circumstances.

Our private client team here at Wilson Nesbitt have the knowledge and experience to help advise and guide you through the process. 

Please don’t hesitate to get in touch: simply give us a call on 028 9124 8823 or send us a consultation request.