Did you ever grow up hearing the expression “As safe as houses”? It was one that I heard a lot as a child and got me thinking if it’s stood the test of time.

We’re brought up to believe that property is always a safe bet, certainly from an investment point of view, and I’m sure you’ve seen the prices skyrocket throughout your lifetime, without much indication of slowing down.

Maybe Newton was wrong after all when he theorized, “What goes up must come down”?

Obviously, this is great news for you, and eventually, your beneficiaries when you finally decide to call it a day and pass down the baton.

Although the saying still rings true in many ways, when it comes to planning your estate, there can be some situations that mean it’s not always as safe as we’re led to believe…

One thing most couples don’t realize is that when you purchase your home, 9 times out of ten it’s jointly owned, meaning you both own 100% of that property, rather than owning half each, as you would think makes sense.

Why is this a problem?

There can be several reasons why this can leave you open; I’ve discussed some of the most common ones below, but I would always advise getting some specific advice for your situation.

You have children from previous relationships -

If you want different people to benefit from your estate, the house will automatically move into the survivors name upon death, meaning your part of the house is not guaranteed to pass to who you would like.

This could result in something often referred to as “sideways disinheritance”.

Yes, I’m sure you trust them implicitly, but it means there’s always going to be that  feeling in the back of your mind, knowing that things aren’t quite guaranteed.

In our experience, having everything laid out clearly, with no chance of your wishes not happening can save a lot of headaches and heartache down the road.

No one wants to spend their retirement with “what if this or that happened” rattling around in the back of their mind every day.

In this situation, having a bit more protection makes total sense.

One of you requires care in later life –

Ah yes, the dreaded care fee situation…

As joint owners of a property, if one of you requires care in later life, the whole house is taken into consideration by the local authority.

With the price of care homes fees around £1000-1500 per week, this can see your hard work paying off your mortgage haemorrhaged in care costs.

Switching your property ownership over to “tenants in common” and having the right will in place, means you can protect your half if the other one requires care.

Yep, pretty sensible planning for most cases.

Don’t worry, this is not what is referred to as “deliberate, deprivation of assets”, and the local authority won't come chasing you down with a big stick!

How does a Property Protective Trust work?

Don’t worry, this isn’t the part where I tell you about this super-duper complicated legal process! In essence, it’s actually quite simple…

Your tenancy is split at the land registry –

Your ownership status of the property is changed to tenants in common, which means you have your own, individual 50% of the property.

This allows you to choose your own, separate beneficiaries if you wish, or have the same beneficiaries, but your half is also protected.

A “trust” is created for your half on first passing –

When one of you passes, half of the house is held in what’s called a trust for their chosen beneficiaries.

This allows for that half to be safeguarded from care fees should the other half require it, and protect against potential disinheritance of their beneficiaries should the other half decide to change their will or meet someone new following the first one of you passing.

The survivor is granted a “right to reside” in the property – this way beneficiaries only inherit the Trust after all of the owners have deceased.

Don’t worry, just because half the house is technically protected for the deceased’s beneficiaries, the survivor is allowed to remain in the property until their passing, or sell the property and buy a new home for the full value. Half of the new property will be protected in Trust for the deceased’s beneficiaries.

Again, this makes things very clear, and gives much needed peace of mind.

Basically, your individual half is protected and goes exactly where you intended it to.

Usually, this is exactly why people want to do a will in the first place, but don’t realise a “standard will” doesn’t actually offer that protection.

A good analogy to use is car insurance; a standard will is similar to third-party cover, whereas protective property trust wills are more likened to comprehensive.

Certainly something to consider when doing your wills…

We hope you found this useful -

If you’re looking to do a will and not sure where to start; click the link below, fill in your details, and we’ll be in touch to talk it through.

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