A property protection trust serves as a means to safeguard your property assets for the benefit of your beneficiaries. By establishing this trust, you transfer ownership of your property into its care, making the trust the official new owner. Notably, unlike other trust types, you retain the ability to reside in and utilize the property throughout its tenure in the trust.
You can set up a property protection trust for a variety of reasons.
One of the biggest benefits is that it can help you protect your property from being included in your estate for inheritance tax purposes.
This is because the property is no longer legally owned by you.
Instead, it is part of the trust, which is a separate legal entity.
The value of the property is therefore not counted as part of your estate when calculating inheritance tax liability.
If you need to go into a care home and your assets are assessed to pay for the costs, the property owned by the trust may be protected.
This is because, as before, the value of the property does not belong to you anymore.
Your beneficiaries are the beneficiaries of the trust instead.
When you set up a property protection trust see here for putting a property in trust, you will need to appoint trustees to manage the trust.
Trustees have legal powers and are required to act in the best interests of the beneficiaries.
They will be responsible for managing the trust’s affairs, including maintaining the property and managing any income it generates.
Setting up a property protection trust is a decision that should not be taken lightly. Seek professional advice to determine if it is right for you. Consider ongoing costs, such as legal and administrative fees. A property protection trust offers several benefits. It helps reduce inheritance tax liability, safeguards your property from long-term care expenses, and provides peace of mind. Nevertheless, consult with professionals and carefully consider your options before proceeding. This ensures that the trust aligns with your unique needs and requirements
STEP ONE
Hire a pro: If you want to establish a property protection trust, it’s crucial to consult with a professional. They’ll guide you through the process and handle all the legal formalities. Deciding to create a trust can be complex, so it’s always wise to seek expert advice. An experienced solicitor can help you set up your trust and address any queries or apprehensions you might have
STEP TWO
Fund the trust: Your property protection trust will not function without assets.
Hence, the trust must be properly funded.
Benefactors can fund trusts during their lifetime or upon passing.
Funding a trust will be different for each family since it will depend on the assets owned and the family’s circumstances.
This step is where professional advice is crucial since many factors will impact the funding decision.
STEP THREE
Choose the right kind of trust: When it comes to setting up a property protection trust, it’s essential to select the right type of trust.
Three types of trusts are popular in the UK – bare trusts, discretionary trusts, and lastly, interest in possession trusts.
The type of trust you choose will depend on your specific circumstances and your preferences.
It’s essential to work with your solicitor to determine the most suitable type of trust to meet your objectives.
