Protecting Your Assets

DS Wills & Estate Planning offers a variety of trusts that can be incorporated into your Will to ensure that your assets continue to be protected after your death.

Protecting your assets if you go into care

Sadly, up to one in three women and one in five men will need formal care during their lifetime, with more than 500,000 people currently living in residential care. Under the Care Act 2014, if a person is taken into care the Local Authority can use the value of the home owned by that person to fund his or her own care. This could ultimately mean that when the person dies, there is very little of their estate left to be given to their family.

It is illegal to deliberately avoid paying care fees by giving your property away, however it is permissible for both spouses to make a provision in their Will to “sever the tenancy” and allow each spouse to put their half of the property into a Property Protection Trust for their intended beneficiary(ies). This half of the property is then safeguarded for the family making sure that at least some of the estate is passed on to the children and is not available for the Local Authority to include during the financial assessment for care fees.

What happens if I re-marry after the death of my spouse?

If you remarry after the death of a spouse and do not update your Will, your estate may become subject to "sideways disinheritance". Essentially, this means the estate you built up with your former spouse passes to the family of your new one. In some cases, this can even mean the disinheritance your own children!

This is because marriage revokes all earlier Wills and, if not updated, your Will can be deemed invalid, whereupon your estate becomes subject to the Law of Intestacy.

A Property Protection Trust or a Flexible Life Interest Trust can be used to prevent the above scenario by ensuring that your intended beneficiaries still inherit your estate.

I live with my partner but we are not married. What about Inheritance Tax?

Inheritance tax is a tax which is paid on the value of all you own when you die. The threshold above which you must pay 40% tax is currently £325,000 (known as the Nil Rate Band). For example, if your estate (everything you owned at the time of death, including your house value) was worth £425,000 then you would have a taxable estate of £100,000. This would give rise to a tax bill of £40,000 and therefore less money going to your loved ones. The inheritance tax threshold for a married couple is £650,000 for the current tax year, providing they leave everything to each other on first death.

However, this is not good news for everyone as this system doesn’t help couples who are not married, and it doesn’t help those who don’t want to leave everything to their surviving spouse.

If you are an unmarried couple, you could benefit from the inclusion of a Nil Rate Band Discretionary Trust in your Will to allow your partner to make use of your £325,000.00 allowance.

Other Trusts available include:

  • Childrens' Trust

  • Discretionary Trust

  • Disabled Persons Discretionary Trust

  • Asset Protection Trust (Lifetime)

For more information or to book your FREE will review, call me, Danielle at DS Wills & Estate Planning today on 01642 968707. Alternatively, fill in the callback form on this page.