Property Protection Trust
By simple definition, the Property Protection Trust (PPT) helps to protect a share of a property. You may want to do this to pass down your share of the property to future generations and it is a great way to prevent sideways disinheritance or help protect your assets from third parties.
Sideways disinheritance is common where a married couple, each with children from a previous relationship don’t protect their share of the property. They might, for example, have Mirror Wills leaving everything to their spouse, but after the death of the first partner the surviving spouse changes their Will, often in favour of their own children therefore disinheriting the first partner’s children.
A PPT allows you to protect everyone’s needs and is probably one of the most common Trusts in existence. The Trust is included in your Will and would be managed by Trustees specified in the Will.
A PPT will protect the needs of the surviving spouse by giving them a life interest in the property, and after they have passed away the trust ends and the share in the property goes to your chosen Beneficiaries.
This will look after the needs of your surviving partner as well as your Beneficiaries by securing their inheritance and ensuring that your partner has the right to live in the property for the rest of their life.
It may also have the effect of protecting your share in the property should your surviving partner require residential care meaning the whole house cannot be used as collateral to fund it.
Disabled & Vulnerable Persons Trust
This type of Trust is used where a testator wants to provide in their Will for a Beneficiary or Beneficiaries who may not be able to manage assets such as money themselves. Examples include someone with a physical or mental disability, or someone who suffers from substance abuse.
The Trust will give discretionary power to the Trustees (people appointed to control the Trust) to drip feed money to the beneficiary(s) as and when it is needed. This means that those that suffer from substance misuse will not squander the money, and those needing care will have money when needed.
Family Asset Protection Trust
There are other types of Trusts which can be set up during your lifetime for the benefit of ring-fencing your assets. These are often referred to as Asset Protection Trusts. These Trusts can handle money, capital investment bonds and also real property.
Making the decision to transfer your home into a Trust is a big one. There are important questions that need to be addressed to ensure it is the right one for you. Our advisers will be able to help and will suggest a better alternative if one is available.
Your home is often your biggest asset and the asset you most want to protect for future generations. Putting it into Trust is a process whereby you hand over the legal title of the property to the Trustees of your Trust. You still have the right to live in the property and enjoy it, and it can still be sold if you need to move, for example, but the Trust is managed by the Trustees in accordance with the Trust Deed (which outlines the rules and conditions of the agreement).
Advantages of setting up an Asset Protection Trust are that it can ring-fence your assets, protect personal assets from third party creditors such as business debts, protect assets against sideways disinheritance, and may mean that due to the size of your estate, it can save time and hassle for your Executors when dealing with your estate administration, also potentially resulting in reduced probate costs.
One of the Trusts we offer also allows the facility to utilize the Residence Nil Rate Band on top of the current Nil Rate Band thus allowing a married couple to have an increased Inheritance Tax threshold available to them on death. This is a very useful tool in the Inheritance Tax assessment.
Employee Succession Trust
This is a statutory form of Trust which is created to allow the next generation of directors and employees of a company to share in its ownership in a managed way.
Central to its benefits are succession planning, the protection of family investment businesses for the next generation, the reduction of the risk of future dissipation of family wealth and the ongoing control of assets.
Key taxable benefits exist with this form of Trust. It should be considered as a long-term arrangement and when contemplating this solution attention should be given to the long-term future of the company.