Care Fee Trust Wills

What is a Care Fee Trust Will and how does this work?

A Care Fee Trust Will is also known as a Protective Property Trust Will or an Asset Protection Will. It’s an estate planning tool designed to safeguard a portion of your estate from potential care home fees – whilst ensuring your spouse or partner can continue to live comfortably in the family home.

The mechanism operates through the creation of a Trust upon the first death. When the first spouse dies, their share of the family home – typically 50% – passes into this protective Trust rather than directly to the surviving spouse.

The surviving spouse retains the right to occupy the property for life. But, crucially, they don’t own the deceased’s share outright. Then, on second death, the Trust assets pass to the intended beneficiaries – usually children or grandchildren.

This then is potentially outside the scope of Care Fee assessments. So as you can see, both partners need to create this Will type when they’re still alive. The structure exploits a distinction in care fee legislation between assets you own outright and the beneficial interest that you might have in a Trust property.

Although, I must emphasise that local authority assessments can be complex and are subject to ongoing legal developments.

How do I know if a Care Fee Trust Will is right for me?

A Care Fee Trust Will merits serious consideration if you’re in the following circumstances:

• Your primary asset is your family home, and it’s valued above the current care fee threshold of £23,250 – which, as you can see, is not a lot of money.
• You are married or in a civil partnership, with shared property ownership.
• You have children or other intended beneficiaries whom you wish to protect from care fee depletion.
• You’re concerned about the rising cost of residential care, which can easily exceed £50,000 annually in many areas.

However, this arrangement is not suitable for everyone. If you require maximum flexibility to release equity from your property, or if your estate planning needs are relatively straightforward with modest assets, conventional Wills may prove more appropriate for you.

What are the benefits of a Care Fee Trust Will?

The principal advantages include asset protection, and this is the main benefit I advise clients to consider. Properly drafted and enacted, Care Fee Trust Wills could potentially preserve up to half of your property value from care fee assessments for future generations.

They also provide security for the surviving spouse. The Care Fee Trust Wills give a guaranteed right of occupation in the family home for life, thereby maintaining stability during a difficult period.

Also, the Trust structure can ensure your children receive their intended inheritance rather than it being consumed by care costs. And, of course, there’s peace of mind. Once in place, the Wills can help reduce anxiety about the financial impact of future care needs on your family’s security.

Because of how the ownership of the property changes, it’s worth noting that these benefits must be weighed against certain restrictions on the survivor’s ability to deal with the property freely.

How much does a Care Fee Trust Will cost?

Here at Will Power, we charge £595 plus VAT for Care Fee Trust Wills for a couple. Elsewhere, professional fees for preparing Care Fee Trust Wills can range from £800 to £2,500 plus VAT for a married couple, depending upon the complexity of your circumstances.

This investment should be considered against the potential savings. Care fees can easily consume £50,000 to £100,000 or more over time. Many clients find the cost modest when measured against the substantial family wealth potentially preserved here.

We offer a fixed fee, providing certainty about costs from the outset.

What is the process for making a Care Fee Trust Will?

The process typically unfolds as follows. I conduct an initial consultation to assess your family and financial circumstances, uncover other assets and understand your objectives.

This usually leads into a detailed analysis of your current estate planning arrangements and identifying specific requirements. I explain the legal implications and practical operations of the arrangements.

My colleagues then carry out the drafting of mirror Wills, incorporating the protective Trust structures and, if necessary, the Land Registry paperwork to change the property ownership from joint tenants to tenants in common.

The final steps are the execution of the Wills, with proper witnessing and secure storage if needed.