Life Interest Trusts: protecting your loved ones in long-term careFebruary 28, 2020
We are approaching the end of You Can Care Week; an annual event hosted by “Home Instead: Senior Care”, with the aim to encourage family and friends to make a real difference in the life of an older person in long-term care.
Our Private Client team at Ince Metcalfes have long applauded the care givers in our communities for the invaluable work that they do, and we aim to provide legal services to protect people who are worried about funding potential long-term care.
When a legal professional advises on setting up a Trust within a Will, they are referring to “care funding” or “care fee planning”. There are various types of Trusts, but for ‘You Can Care Week’, we will be focusing on Life Interest Trusts.
In simple terms, a Will is a legal document which outlines what you wish to happen to your money and property after you die. Wills can be made individually or jointly, with similar provisions for partners.
In addition, a Life Interest Trust can be included in your will, is suitable for individuals who wish to safeguard their money, property and other assets for your partner or loved ones. When you put your property into a Life Interest Trust, it will belong to you during your lifetime, but once you have died, the property will be held on trust for the person you set up the Trust for (your beneficiary), from which they will have a right to live in the property and/or to receive the income from it (capital may also be advanced to them).
The executors named in your Will are often also the “Trustees”, who will manage and look after your Trust Fund. They will not benefit from the Trust, but they will manage it as though it was their own, for the benefit of your beneficiaries.
For example, if you and your partner own your property 50/50 as tenants in common, and you leave a life interest in your 50% of the property to your partner, then your partner will be able to live in the property for the duration of their lifetime under the protection of your Will (although they still own their 50%). While your partner is alive, they may live there as the Life Tenant, but your 50% is held in Trust for your children/grandchildren (the Remaindermen).
In addition, if your partner needed to go into long-term care after you have died, then having half the property in Trust will minimise the claims of the local authority in terms of long-term care fees mean-testing, as only half the property is part of the assessable capital of the survivor (your partner), as the half of the property held by the Trust will be safeguarded.
If you are considering your financial future and the possibility of long-term care, our team has vast experience in advising how to legitimately safeguard your home from care fees, with a variety of options tailored to meet your individual needs. To speak to one of our solicitors for a free 30 minutes consultation, call or visit our Bristol or Portishead offices.