Property Protection

The Property Protection Trust

Protecting your property from local authority assessment to pay for long term care fees, debtors, future divorces and other predatory third parties.

When considering a Property Protection Trust (PPT) it is important to be able to distinguish the difference between tenants in common (TiC) and joint tenants (JT).

In short both tenants in common and joint tenants refer to how a property is held or owned and this ‘ownership’ is registered with the Land Registry. Traditionally, when houses were purchased, the owners would have been registered as Joint Tenants. This would have meant that if one tenant died, the other tenant would have inherited the property by virtue of survivorship.

What tenants in common means is that people are able to sever the tenancy on a property and their ‘share’ can be gifted via their Will.

*The information provided has been based on a married couple.

What is it?

What a PPT does is protect the share of the property for the benefit of a specified beneficiary/beneficiaries and then once all the tenants in common pass away the property can be distributed.

For example, a married couple, who have not been married before want to leave their share of their house to their children. They currently own the house as joint tenants. Dorset and Wight would sever the tenancy on the property registering them each as 50% owners. They then have their Wills written to represent that if one died their half of the property would be held on Trust for the benefit of their children but allowing the survivor to live in their share of the property for life or a specified period of time.

When is it set up?

The trust deed would be set up on the death of the first testator (the person who’s Will it is). Their half of the property would be transferred into the trustee’s names (usually the survivor and the children who will look after the share) and would be held until the second testator died.

What happens then?

On the death of the second testator the property would then pass to their children and they would own the property outright. Or if, for example, there was an outstanding mortgage, or the property was to be sold then they would receive any equity/capital and also an income generated by the trust property.

What is the point?

As the couple are married and have children, they may think that the property would pass automatically if something happened to them. However, this is not always the case. The trust will guarantee the protection of the share of the asset for the beneficiary. Without the trust, circumstances could arise whereby after one spouse dies the other remarries and then the children could be disinherited because the house will have passed by survivorship. This will then subsequently pass to the new spouse if the testator died, and consequently onto the new spouses own children or relatives.

This is what is called protecting your “Bloodline” from sideways disinheritance.

What about sale of the property?

A PPT can include powers or provisions such as allowing for the surviving spouse or life tenant to downsize or purchase a substitute property, meaning that just because their share of the property is in trust, they can still move should they wish.

The overall purpose of the trust is to provide protection and ensure that a share in a property will pass down your bloodline.

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