What does the Home Protection Trust Involve?

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For most people, ownership of their home does not always mean they are wealthy – at least not in the sense of having money to spend. Even with rapidly increasing property values home ownership usually revolves around practical issues such as having a place to live or an inheritance for children or grandchildren.

The Home Protection Scheme is designed for homeowners and involves the transfer of your home into a Trust.

In practice there may be a number of reasons why transferring your home to a Trust may offer valuable benefits, one of which is the option to ensure the home that you have paid for over the years passes to your family and friends as you intend it to.

How Does It Work?

Under the terms of the Trust you, as the person creating the trust (the settler) are also a beneficiary so that, once the trust is created, you may continue to live in your home for the rest of your life or until you decide that residence is no longer required or not appropriate.

The Simplicity of the Home Protection Scheme

 


Property transferred

Despite the fact that the Trust now owns your home you still retain the benefits and flexibility of home ownership.  For example, if in the future you wished to move to a smaller property, you would retain all rights of residence in the new property.

What are the Benefits?

The principal benefits of establishing the Home Protection Scheme include:

• Passing control of your home to the trustees, which will include you.
• Ensuring that your home will pass to those individuals you wish to benefit at a time selected by you – for example, at the time of your death.
• Enabling your home to be held for those who cannot hold it for themselves – for example, children or disabled persons.
• The ability to protect the value of your home from spendthrifts or to keep ownership of the property private or secret.
• It may avoid the value of your home being included in a local authority means test for residential or domiciliary care.
• To speed up the administration of your estate and avoid the need for a Grant of Representation.

Although not all these above reasons will apply to everybody, the impact of just one or two of them may be sufficient justification to proceed.

Key Facts about the Home Protection Scheme

The Home Protection Scheme is designed for those who wish to continue living in their home for the rest of their lives but are concerned about how their property, or its proceeds of sale, will be used on their death.

Before establishing the Home Protection Scheme there are a number of issues that we recommend you consider:

·      Individual circumstances vary a great deal and it is impossible to state categorically whether this, or any other method of estate planning, is best for you without carrying out a thorough review of your affairs.

·      You should always discuss your plans with your immediate family on whom this will have the greatest impact, i.e. the beneficiary(ies) of your estate.

·      In the future if you need long term care and have previously placed your home in Trust, the right of residence will usually be replaced by the right to receive an income (if your home were to be let).  This income will be allocated towards the cost of care, although the capital value of your home will usually be disregarded.

·      If, having moved into care, it is found that you have deliberately deprived yourself of resources (including your home) you can be considered as still having those resources and the local authority will calculate your entitlement accordingly.  This would include the establishment of the Home Protection Scheme.

(The timing of the disposal of an asset has to be taken into account.  Whilst there are no hard and fast rules, the longer the period between the transfer of the property to the Trust and the need for care, the lower the likelihood that ‘deliberate deprivation’ can be proven).

You could simply give your home to members of your family without the use of a Trust; however it is strongly recommended that you do not do this because:

·      Once you have given your home away it is no longer yours and you lose control over it.

·      If the recipient were your son or daughter and he/she were to divorce or die before you, or become bankrupt, the security of your home would be threatened.

·      The new owners could pressure you into entering residential care sooner than you thought necessary or would have wanted to.

All these pitfalls can be avoided by use of the Home Protection Scheme

Finally, there are some local authority grants for repairs/maintenance to your home that, if you proceeded with the Home Protection Scheme, you would no longer be eligible for.  These are mainly concerned with making improvements to enable an infirm or disabled person to continue living in the home.

The Next Step

If you are concerned about the effect that having to meet the cost of residential or domiciliary care will have on the amount of money that you leave to your family and friends, you may wish to consider the benefits available through the Home Protection Scheme.

If you would like to know more about the Home Protection Scheme, download our brochure here or: