So many of us think that writing a will is all we need to do look after our beneficiaries. But a will only protects/distributes our assets on our death and if those assets have been eroded eroded during our lifetime there may be little left to pass on to our beneficiaries
Unlike a Lifetime Trust, a Will Trust is only created once you pass away therefore does not protect your assets during your lifetime.
A Will Trust is created within your Will and allows you to protect your property and other assets you wish to pass to your family after you are gone. The Trust only becomes activated upon your death.
“Will Trusts” are often used by couples to try and protect their own share of their family home if they die first. This can be achieved by firstly splitting the ownership of their property into “Tenants in Common” with Land Registry. Then rather than leaving their share to each other when they die (like a Mirror Will) they instead each leave their share to a trust. The trust only comes into force upon the death of the first spouse/partner.
This is often useful for couples that have come together from previous relationships with children to try and ensure that their half is protected for their own children on death.
A Will Trust only becomes effective when you pass away. A Will Trust is created on death, often to protect your proportion of a property or savings from being lost through sideways disinheritance or divorce.
They are also very useful if you have a beneficiary that is vulnerable or unable to manage money. You can appoint a trustee to manage money on their behalf.
Will Trusts Versus Mirror Wills
Upon the first death of the couple, with Mirror Wills, the whole estate passes to the surviving spouse/partner outright. If the surviving spouse/partner then remarries and fails to make provision for their children in a new Will, there is a risk that everything will go instead to their new spouse.
If you have children from a previous relationship, having a “Will Trust” means you can leave your share of the family home to your children in trust, whilst allowing your spouse to carry on enjoying the right to live in the property for the rest of their life.
With Mirror Wills, the whole estate passes to the surviving spouse, meaning the survivor owns everything in their sole name. Should the surviving spouse then require long-term care, the entire estate can be means tested.
“Will Trusts” are often a desirable way for people to ring-fence the deceased spouse’s share from care home assessments should the survivor of a couple need to go in to care.
If you have a “Will Trust” and your partner or spouse dies, you as the survivor retain a right to live in the house often referred to as a “lifetime interest”.
If you need to pay for care as the surviving spouse, only your share of the home’s value will be assessed by the local authority. The part owned by the trust is not counted. ”