Asset Protection Trust Will

What it is

A Will that puts your share of the home into a property trust and settles the rest of your estate on a flexible life interest trust for your surviving partner. They have the use and the income for life. The capital is preserved for the people you chose.

How it works

• Your partner takes the income and the use of the trust assets. The trustees hold the capital.
• Because the interest starts immediately on your death, the spouse exemption applies on the first death where you are married or in a civil partnership.
• The trustees are usually given power to advance capital to the survivor if the income is not enough, so the arrangement is not rigid.
• The trustees can often be given power to bring the life interest to an end early. Where the capital then passes outright to the remainder beneficiaries, the survivor is treated as making a potentially exempt transfer, which can be useful if they are already wealthy in their own right.
• The property side works the same way as a property protection trust Will, so the joint tenancy has to be severed first.

Where specialist advice matters

• Only the first interest in possession arising after a death gets the favourable treatment. Successive interests created later fall into the relevant property regime, with ten year and exit charges.
• The residence nil rate band conditions have to be built in deliberately. A right to occupy for a lineal descendant can qualify. An age contingent gift to a grandchild will not.
• The trust will usually need registering with HMRC once it is still running at the second anniversary of the death, and kept up to date after that.
• Trustee selection matters more here than on almost any other document, because these trusts run for decades and the powers are wide.