For those of you who have been fortunate enough to find happiness through marriage second time round, you and your new spouse may, nonetheless, be keen to protect your assets after you each pass away, ensuring that any children from previous relationships still benefit from your respective wealth.
Equally, you may also each want to ensure that any surviving partner will have the security of living in the marital home for the duration of their lifetime. As such, by utilising a well-drafted property protection trust, this can help to protect your assets, as well as each other, after you are gone.
What are the inheritance rules for spouses?
Under the inheritance rules in England and Wales, otherwise known as the rules of intestacy, regardless of whether you are entering your first or any subsequent marriage, your spouse will become the primary beneficiary of your estate, being given priority over any children that survive you.
Accordingly, under the current law, unless you have a valid will in place that expressly provides otherwise, your new spouse will stand to inherit the first £250,000 of your estate if you die first, in addition to half of the remaining estate – with the other half to be divided equally between any children.
How can a property protection trust help?
A property protection trust is a legal mechanism, typically contained within a last will and testament, in which the testator’s share of a property is held in trust for the purpose of allowing any current occupant to continue residing in the property whilst protecting the capital value for the benefit of others.
In other words, the property protection trust will allow the surviving spouse to live in the marital home for the remainder of their life, with the property passing to any beneficiaries upon their death.
There are several benefits to a property protection trust, from providing peace of mind for both you and your spouse that you will each continue to have a home to live in upon the other person’s death, to ensuring that your respective children will still eventually benefit from your estate(s).
In particular, through a property protection trust the deceased’s share in any property will be ring-fenced in the event that the surviving spouse decides to remarry. It will also protect the deceased’s share of the marital home from being factored into any calculation for the long-term care of any surviving partner.
How do I set up a property protection trust?
Needless to say, it is essential that you revise your will when you remarry, not least because marriage invalidates an existing will. This will also protect everyone involved and is also a good opportunity to review and revise arrangements. However, it will not necessarily be sufficient to make a standard will. Even if you and your spouse each leave everything to the other, with your joint estates to be divided equally amongst your children when the second person dies, this will not legally prevent the surviving partner from changing their will and removing any children as beneficiaries from their will.
Sadly, without a property protection trust, there is no guarantee that your wealth will be distributed in accordance with your wishes. As such, given the importance of getting this right, you should always seek expert legal advice on setting up a property protection trust. In this way, any assets held within the trust will be protected for the benefit of those you intended.
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
