It can be a great relief to reach a point in your life where your mortgage is paid in full and your home is now your own. But how can you make sure this prime asset is protected for the long term future?
Getting the right protection for your estate and assets so they’re not consumed by posthumous costs or lost unnecessarily can be cause for concern. But the answer could be a Family Property Probate Trust (FPPT). Explained here, we’ll tell you what an FPPT is, how it works, and how it can benefit you and your family.
A Family Property Probate Trust Explained – What Is It?
An FPPT is not a will, but an asset preservation trust and is set up during your lifetime to receive assets up to a value of £325,000 per person. The trust is designed to only include your property up to this amount. Usually family-controlled with you as the main Trustee, you will continue to have control over the trust property.
For any financial assets and savings, including any Death in Service, life insurance, personal pension, or Self-Invested Personal Pension lump sums, these can be placed into a Spousal Bypass Trust.
How Does An FPPT Work?
With your property in the trust, an FPPT can legally protect it from creditors or other claims against your estate after you die. The trust ensures the full value of your assets can be passed to your children or other beneficiaries as you intend.
When setting up your FPPT, you get to choose who looks after your assets (your trustees) and who benefits from them after you die (your beneficiaries). You’re in full control of the trust while you’re still alive and of sound mind, and you can leave detailed instructions or requests on how the other trustees should manage and distribute your assets after your death.
How Will An FPPT Benefit You?
As we described, an FPPT can protect your assets against potential claims against them. But there are other ways in which an FPPT can really benefit you and your family, including:
- Probate fees: Expensive bank and legal fees can be greatly reduced with an FPPT in place.
- Bankruptcy: Subject to certain conditions, an FPPT can protect your assets from being seized if you (or your children, after your death) go bankrupt.
- False claims: All property and assets in the FPPT are protected from claims by individuals who you choose not to include as a beneficiary (ex-spouses, estranged spouses or children etc).
- Divorce: An FPPT allows you to reduce any available assets in the case of any future divorce.
- Remarriages: When you choose to remarry, if your assets go to your new spouse when you die, your own children may be disinherited – an FPPT protects against this.
- Problem beneficiaries: An FPPT provides a level of independent control of any inheritance when left to beneficiaries who may have addictions or a tendency to misspend.
Asset Preservation Trust Explained By Us
Like many legal trusts and wills, while beneficial, the process of setting up an FPPT – an asset preservation trust for your home – can be complicated with a range of complex issues to work through. This article gives you an overview, but you should get professional advice to help you get a full understanding.
Our Trust team is well qualified to help you and give you the answers you need. So when you’re ready to take the next step and have your Family Property Probate Trust explained in more detail, please contact us today.