They Are Not the Same Thing
If you have been looking at ways of protecting your home, you may have come across companies suggesting that you should put your house into trust now.
That is not what a Homeowner Protection Will does.
With a Homeowner Protection Will:
- you continue to own your home;
- you remain in control of it;
- you can sell or move in the normal way;
- nothing is normally transferred into the Will trust while you are alive;
- and the protective trust generally comes into effect only after the first homeowner dies.
A lifetime property trust is different because the trust is created while you are alive and property may be transferred into it immediately.
With a Homeowner Protection Will, Your Home Stays Yours
This is one of the most important differences.
You are not giving your home away.
You are not transferring it now to trustees.
You continue to own and control it.
The planning is contained within your Will and becomes relevant when the first homeowner dies.
The survivor can then normally continue living in the property, while the deceased person’s protected interest is preserved for the beneficiaries they chose.
So What Actually Happens?
For a couple, the property will normally be arranged so that each person has an identifiable share, usually by owning as tenants in common.
If necessary, I can deal with that as part of the Homeowner Protection Will service.
Your Wills then contain the protective trust.
While you are both alive
Nothing is normally transferred into that Will trust.
You continue living in, owning and controlling your home.
After the first death
The deceased person’s protected share passes under their Will trust rather than simply becoming the survivor’s outright property.
The survivor can normally remain secure in the home.
Ultimately, the protected inheritance passes to the beneficiaries chosen by the person who died.
[How Homeowner Protection Wills Work →]
What Is a Lifetime Property Trust?
A lifetime trust starts while you are alive.
Depending upon the arrangement:
- property may be transferred into the trust immediately;
- legal and beneficial ownership may be separated;
- trustees may acquire significant responsibilities;
- there may be restrictions on what can be done with the property;
- tax consequences may need consideration;
- and there may be ongoing administration or costs.
There are perfectly legitimate reasons for using lifetime trusts.
But they are a substantially different form of planning and should not be confused with a trust contained within your Will.
A Simple Comparison
Homeowner Protection Will
When does the trust normally start?
After the first homeowner dies.
Do I put my house into the trust now?
No.
Do I continue to own and control my home?
Yes.
Can I sell or move home?
Normally, yes.
What is its main purpose?
To protect an inheritance for your chosen beneficiaries while providing security for the survivor.
Lifetime Property Trust
When does it start?
While you are alive.
Might my property be transferred into it now?
Yes.
Can ownership and control change?
Potentially.
Do trustees have responsibilities?
Yes, depending upon the arrangement.
Should I take specialist advice before transferring my home?
Absolutely.
Be Very Careful About Promises to “Protect Your Home From Care Fees”
Some lifetime trusts are promoted with suggestions that transferring your property into trust will prevent it ever being taken into account when assessing care costs.
There is no simple arrangement which guarantees that.
If assets are deliberately transferred with the intention of reducing what somebody must pay towards care, the local authority may consider whether there has been a deliberate deprivation of assets.
That does not mean lifetime trusts have no legitimate uses.
It means the reason for creating the trust, and exactly what it achieves, matter.
Before Putting Your Home Into Any Lifetime Trust, Ask These Questions
- Why do I need to transfer my home now?
- Who will legally own it afterwards?
- Who will the trustees be?
- Can I remove or replace them?
- Can I sell my house whenever I want?
- What happens if I want to move?
- Can I remortgage?
- What happens if a trustee dies or loses capacity?
- Are there tax consequences?
- Are there ongoing administration charges?
- What happens if I change my mind?
- Exactly what protection am I being promised?
- Is that protection guaranteed?
- What will the arrangement cost now and in future?
Do not transfer control of your largest asset until you understand the answers.
These are essentially the safeguards already built into your original draft.
Why I Prefer a Will-Based Solution Where It Does the Job
For many homeowners the objective is fairly simple:
Look after my husband, wife or partner if I die first — but help make sure my share of the home eventually reaches the people I intended.
A Homeowner Protection Will can often achieve that without transferring your home into a lifetime trust.
You retain control during your lifetime.
The protective arrangement comes into operation when it is actually needed.
Are Lifetime Trusts Always a Bad Idea?
No.
That would be far too simplistic.
Lifetime trusts have legitimate uses and may be appropriate in particular circumstances.
But transferring your home during your lifetime is a significant decision.
It should be done because there is a clear and worthwhile reason, not simply because somebody has frightened you about care fees.
My Approach Is Different
I start with what you actually want to achieve.
If an ordinary Will is sufficient, I will tell you.
If a Homeowner Protection Will would provide worthwhile protection, I will explain why.
And if your circumstances genuinely require specialist trust, tax or legal advice beyond that, I will say so.
No frightening sales pitch.
No unnecessary complexity.
No need to know which trust to ask for.
Just a clear explanation of the options.