Cohen Knights

Will Trusts

What is a Will Trust?

Will Trusts are incorporated into a Will and are an effective way of holding, preserving and controlling assets, money and property, such as your main residence, after the creator’s death.  A trust is a relationship which is recognised and enforceable in Court.

A Will Trust comes into effect on your death and is an arrangement that allows the trustees to hold assets on behalf of your chosen beneficiaries.  Will Trusts can specify exactly how and when the assets pass to these beneficiaries.

Will Trusts do not need to be complicated or expensive and can provide many benefits.  For example, trusts can:

  • Provide peace of mind knowing assets will be securely held for chosen beneficiaries.
  • Adapt to beneficiaries’ needs.
  • Preserve wealth for the benefit of future generations.
  • Protect wealth for young or vulnerable beneficiaries.
  • Protect wealth and assets from third-party claims.
  • Provide tax planning strategies for chosen beneficiaries.
  • Be used for Care Fee Mitigation.
  • Retain control after your death.
  • ensure children from a previous relationship inherit even if you have a new spouse/partner.

For initial guidance about Will Trusts call our advisors in Norfolk and Suffolk on 0333 1300 509 or contact us online and we will help you.

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A Will Trust has as a number of advantages (as above) which can be created in preparation of your death and will be incorporated into your Will.  A Will Trust therefore allows you to protect your assets following your death but gives you the flexibility to control your assets during your lifetime by directing how they will be held and managed after death.

If you wish to undertake asset protection during your lifetime, please click here

Will Trusts and Avoiding Care Fees

Many people want to ensure the wealth they have amassed over their lifetime passes to their beneficiaries and is not used to pay for care fees. We are often asked “How do we avoid paying care fees” but the Government introduced anti-avoidance legislation allowing a Local Authority or a Court to set aside planning, where people deliberately attempted to avoid paying care fees during their lifetime.

However, we can offer planning which will protect your family’s assets, whilst also avoiding Care Fees using Will Trusts.

Protecting Assets against Care Home Fees

Many couples simply do not know they can safeguard at least half the value of their property by changing the way they own their homes combined with a Will Trust.

Protecting your assets – example 

Mr and Mrs Johnson have a house worth £300,000 (held as tenants in common), and capital of £25,000 each held in separate bank accounts.  They are worried that when they get older their assets will be lost due to the dementia tax.

On the death of the first spouse, if their Will contained a Will Trust, the deceased’s assets would be protected.  Here £175,000 would be held in the Will Trust for the benefit of the surviving spouse, and later for their children.  If the surviving spouse later went into care only their assets would be eligible for assessment by the Local Authority, meaning the half held by the Will Trust is fully protected and cannot be used to pay for care fees.  

In the above example, having already severed the ‘joint tenancy’, the couple owned their home as ‘tenants in common’ meaning that each spouse owned a specific and distinct share in their home (i.e. 50% each) which can be left to their relatives on trust.  Upon the death of the spouse, the survivor can then be left with a ‘life interest’ in the share of the property held in the Will Trust, enabling them to live in the property rent free for the rest of their life.  If the Survivor later went into care, only their half of the property would be counted in any care fee assessment.

This is not deliberate deprivation.  The local authority will not take into account the value of the share in the property held by the Will Trust. This means that following a financial assessment for the survivor, the local authority will only consider their half of the home, meaning the other half in trust is fully protected and cannot be used to pay for the survivor’s care fees.

For initial guidance about Will Trusts call our advisors in Norfolk and Suffolk on 0333 1300 509 or contact us online and we will help you.

Cohen Knights LLP offers expert legal advice in relation to Wills, Lasting Power of Attorneys, Probate, Trusts, Trust Management and other legal services.