I am preparing Wills for a couple who want to ensure that their property is ring-fenced away from the funding of care fees. They are both in their 60s and so long term care is not currently being contemplated.
I have suggested that they sever the Joint Tenancy and in their Wills include a life interest trust in favour of their surviving spouse, thereby ensuring the spouse has the benefit of the property during their lifetime, but excluding that half of the property from the survivor’s estate for financial assessment purposes.
My question is, will the survivor’s estate benefit from the deceased spouse’s transferable Residential Nil Rate band on the second death?
They have been advised that placing the entire property into trust during their lifetime would ring fence the whole property away from care fees. However, I cannot see how this would work if they continue to live in the property.
Any thoughts would be much appreciated.
Harold Bell & Co
I would go for Will planning, protecting half the house but free from the danger of attack as self deprivation, and provided the remaindermen take absolutely on the second death, the RNRB will be available.
Very dangerous to advise on a Settlement and say it will avoid Care fees. However a Settlement has many other benefits, such as saving probate fees on a death and that could be a sizeable fee if the estate is high enough and its a professional charging. The ease of distributing the estate could then be simpler and have some added benefits to children timing when they inherit. The Settlement can also have advantages on IHT for the future beneficiaries. If any of these may apply and be of benefit in the longer term, this couple may find that Care fees can be argued against (if ever needed) as the Settlement was set up for other reasons.
Bridge Wills Ltd
Forget placing property in trust during lifetime. Too close to deliberate deprivation. Also even with the Will planning route there are reports of some local authorities challenging life interests. Would a nil rate band discretionary trust on first death plus flexible life interest trust of residue meet the client’s needs? Also there may be joint accounts that need severing during lifetime as well as the joint ownership of the home?