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How can I protect my property from care home fees and other modern threats?

a house protected in a trust from care costs

As an estate planner I'm always asked How can I protect my property from care home fees, debt, and remarriage.

Imagine you own a house, and you want to ensure it goes to your loved ones after you pass away. Let’s consider Jason and Sandra, a family with two kids living together in the family home. If Jason dies, Sandra becomes the sole owner of that property, and what Jason and Sandra want is for their two kids to inherit the house when they’re both gone.

The trouble is there are several modern threats that can occur between both deaths, which could mean the kids receive nothing at all.

How can I protect my property if my partner remarries?

A study on dating and remarriage over the first two years of widowhood revealed that within 25 months, 61% of men and 19% of women were either remarried or involved in a new romance. So, if Sandra remarries, here lies the problem. Marriage voids wills. If Sandra doesn’t create a new will and passes away, she would die intestate, which is a fancy word for dying without a will. If you die without a will, the government has a standard flowchart that determines how assets are distributed, and it's not what most people want. The first £322,000 goes to the new spouse, and if there's anything left, it gets split 50% between the new spouse and 50% to the children. But let's say Sandra is sensible, and before they go on their honeymoon, they call me up and say, "Josh, I need a will; I just got married." It's worth noting that in a typical millennial’s lifetime, divorce rates have skyrocketed from 19% to 42%, so if that marriage turns sour, the property can get caught up in a divorce, which takes away from their two kids.

How can I protect my property from debt and legal action? 

Let's say Sandra never meets anyone new and instead falls into a deep depression. We may want to think we'd cope in this scenario, but we can never predict how losing a loved one so close may affect us. Imagine if Sandra becomes depressed, stops showing up to work, and develops some unhealthy coping mechanisms, which result in accruing debt. Creditors will be looking at what Sandra owns in her sole name that they can use to settle the debt. Sandra owns the family home in her sole name, which they will look to take. Even if Sandra gets therapy and has a wonderful support circle, it can only take one unfortunate event like running for the train, knocking someone down, injuring them, and that person deciding they want to sue Sandra. When it comes to settling that claim, they will also be looking at what Sandra holds in her sole name.

How can I protect my property from care fees?

Sandra has managed to avoid the first two risks, but imagine if

an old couple discussing selling their home for care costs

Sandra needs full-time care. When we think of care, we're often thinking of the elderly who become frail or ill. Care is also needed by the young; imagine Sandra has an accident and is severely injured to the point that she needs full-time care. Think about what happened with Michael Schumacher, the Formula 1 champion who sustained a life-changing brain injury while skiing. If Sandra needs full-time care, the local authority will be looking at what Sandra owns in her sole name that they can use to pay for the care costs.

How do we prevent this? There is a provision you can include in your will called a Protected Property Trust. Think of it like a special container where you can place your half of the house when you die, protecting it from the aforementioned risks for the benefit of your kids.

How does it work? Going back to Jason's death, instead of Sandra becoming the sole owner of that property, Jason's half of the property becomes protected in trust, which means Sandra’s new spouse won't get the house if Sandra forgets to make a will or gets divorced, as Jason’s half of the house is reserved for the children in the trust. Creditors can't touch it because Sandra now owns the property with the trust, and you can't just take half a house. This holds true for the person at the train station suing Sandra and the local authority and their financial assessment team.

The idea is to give the surviving spouse the same level of control as they would have if they had the asset in their sole name. We achieve this by making them a life tenant, ensuring their right to remain in the property rent-free without the risk of being forced out. You can also ensure that the life tenant maintains control over the property by naming them as a trustee. This means that the surviving spouse can continue to enjoy the property in the same way they would if they owned it in their sole name, including moving house, for example, but without any of the aforementioned threats that could interfere with your ultimate goal, which is for the children to inherit the property.

If you’re looking to write your will or lasting power of attorney book an appointment with Joshua Young. I am A Will Writer covering Farnborough, Basingstoke, Camberley, Aldershot and the surrounding areas.


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