The most commonly-asked question about Wills?

What is the most common question about Wills?

There are many counter-intuitive facts about ageing.

Though what follows are North American statistics, the Scottish position will not differ drastically.

Only 2.5% of Americans over 65 live in a nursing home. In the U.S., three-quarters of people aged 85 years or more live their lives without personal assistance. Dementia (e.g. Alzheimer’s disease) affects only 10% of all people over the age of 70 and two-thirds of people over age 85 are not bothered at all by any form of dementia.

The problem is perhaps not so much ageing itself but that we have been conditioned to think that ageing is terrible.

This attitude may go some way to explaining why, in spite of what you might say is ‘a relatively low risk’ of ending up requiring significant personal care, a lot of attention is focused on one particular issue.

The most common question we get asked is: “How do I protect my home to avoid paying care home fees?”

Unfortunately, there is no easy answer to this and local authorities – including the Moray Council -are becoming increasingly wise to various schemes that people have set up in the past.

“Family Protection Trusts” are prominent in the media.

We often see adverts for Family Protection Trusts, especially in newspapers.

Although these may seem to be a great idea – i.e. to protect your home from being used up to pay for care costs – they do not always work.

Recently, local authorities have been assessing those with a Family Protection Trust as having deliberately deprived themselves of their assets.

This can lead to financial losses and expensive legal complications.

Could a Liferent help?

One way to possibly try to protect part of your home from care home charges, is to leave what is called a “Liferent” in your Will.

This would only work if either one person in a couple is in care prior to death or neither of the parties are in care when one of the couple dies.

With a Liferent Will you can create a trust which gives the beneficiary the right to benefit from an asset (here, the house) for their lifetime, without giving them ownership of the asset.

This ‘scheme’ is generally used when a couple own a property together.

The first thing to check before going ahead with a Liferent Will is how the title to your property is held.

When you buy a property with another person, the title can be held “equally” or it can be held “equally and to the survivor”.

If the title contains the word “survivor” then this means that the property will fall automatically to the survivor – on the first death – no matter what a person’s Will states (this is known as a ‘Survivorship Destination’).

In those circumstances, i order to include a Liferent in your Will, you would need to remove the word “survivor” from your deeds. This is called “Evacuating the Survivorship Destination”. A conveyancer can prepare a new deed which both owners would sign and this is registered with the Land Registry.

What are the key elements of a Liferent Will?

• The Liferenter: The person who benefits from the asset during their lifetime. For example, a parent may leave their interest in a property in liferent to their spouse or civil partner.
• The Fiar: The person who inherits the asset.
• The Asset: This is usually a property but can be any asset that generates income or provides benefits.
• The Trust: The Liferent Will creates a trust to hold the asset until it passes to the beneficiaries.

What are some of the Benefits of a Liferent Will?

• Your estate will only include one half of the value of your house. On your death, your spouse or partner would enjoy a liferent interest in your half of the house whilst owning their own half. That means only their share in the house can be assessed for care costs.

• It is useful for ‘blended’ families. It allows couples with children from previous relationships to ensure all their children are treated fairly and not excluded from their inheritance.
• The Liferent provisions set in stone who will inherit your estate after the surviving spouse or partner dies.
• If you are leaving a liferent in favour of a spouse or registered civil partner, it doesn’t use up the Inheritance Tax nil rate band of the first spouse or civil partner to die. This means that up to two nil rate bands are available on the death of the second spouse or partner, so potentially reducing the overall lHT liability.

How we can help

As you will appreciate from the discussion above, the law is not clear in this area, constantly shifting, and the way things work in practice is affected by various external agencies. Nothing in this article should be taken to be “legal advice”; it’s just intended to illustrate some of the main issues we see in practice, together with possible solutions, depending on your exact, individual circumstances.

If you have any questions at all about making a Will, please do not hesitate to contact us. You can phone us on 01343 544077 or you can send us a Free Online Enquiry via this website. All initial enquires are free of charge and without obligation to take matters further. We are here to help and will do our best.

We’re always happy to receive any questions you may have because they allow us to expand and improve the information on this website – we hope – for everyone’s benefit. Please do get in touch if you have any follow-up questions arising from this article.