A Home Protection Trust is a type of Trust created to protect your family home and your right of residence. The Trust will ensure that your home will pass to your chosen beneficiaries, after your death, with the minimum of hassle and delay. It may also avoid your home's value being taken into account by third party creditors.

A Home Protection Plan is suitable for a single person or a couple who own their own property free of any mortgage. The value of the property should be £325,000 or less (or £650,000 or less for a couple who own in equal shares). The property being placed in the HPT must be your main residence.

If you have a mortgage on your property then, most likely, a Home Protection Trust (HPT) is not for you. Likewise, if you are considering equity release in the future then a HPT is not for you.

Any disposition of a property (legal or equitable), which is subject to a mortgage, is normally prohibited by the lender and so, unless your lender consents to the proposed transfer, you would likely be acting in breach of your mortgage terms.

If you only have a small amount owing on your mortgage then our advice would be to approach your lender in the first instance to see if they would be willing to consent to the proposed transaction. If not, and you have sufficient other assets, you may need to clear any remaining small balance to enable you to proceed with a HPT.

A Trust is created and your property is transferred into the names of the Trustees of the trust. The Trustees cannot sell your property within your lifetime without your consent. If you wish to downsize then the Trustees must sell your property and buy another for you at your request and under your guidance.

If you no longer need a property because you are going to live with a relative or move into a residential or nursing home, the Trustees will sell your property for you and invest the proceeds. You will receive the income from these investments for the rest of your life.

On your death (or the death of the survivor of a couple) the Trustees will transfer the assets in the Trust to your beneficiaries.

This is the person who sets up the HPT, appoints Trustees and decides who the beneficiaries shall be. The Settlor or Settlors provide the asset that will be held by the Trust. As a settlor, you can also be a Trustee too.

The Trustees will manage the Home Protection Trust for the beneficiaries in accordance with the terms of the Trust.

It is recommended that you have a minimum of two Trustees but no more than four (as only four people can be named on the Land Registry Title at any one time). The Settlors can be Trustees if they wish.

You should always appoint someone who you know and trust so that you can be confident that they will follow your wishes. It would not be wise to appoint someone who is a spendthrift, bankrupt or have any gambling/drug/alcohol addictions.

We recommend to all Clients that they consider appointing a Professional Trustee so that they have peace of mind that their wishes will be followed and the HPT managed properly. However, most Clients will trust their closest family and friends to act as their Trustees and so a Professional Trustee may not be required.

If you would like to appoint a Professional Trustee then Premier Solicitors would be happy to act for you. They do not charge for being appointed and it is unlikely that we will be required to carry out any substantive work until the Settlors have died (i.e. when we would be required to sell/transfer the property and account to your chosen beneficiaries in accordance with the terms of the HPT). Any such work would be charged in accordance with our standard fee structures in place at that time.

The beneficiaries will receive the Trust Fund in accordance with the Settlors' wishes.

Yes. Both Goodwills and Premier Solicitors strongly recommend to all Clients that they obtain a letter/report from their GP in relation to your mental capacity at the outset of the matter.

This letter/report may assist to mitigate any potential challenge to the HPT at a later date and, without such a letter/report your Trustees may find it difficult to ascertain the state of your mental health at the time you created your HPT.

If you need state assistance with care home fees in the future it is possible that the gift of your property to the trust will be scrutinised.

If the agency or local authority can prove that one of the reasons for your gift was to obtain assistance or a greater amount of assistance with fees the value of your property can be recovered. In any event the income from any investments in the Trust will be taken into account in any assessment.

If any third party creditor seeks to challenge your HPT, we strongly advise that your Trustees contact Premier Solicitors immediately so that we can ensure that every effort is made to protect your wishes.

Provided you have complied with our HPT criteria regarding medical evidence, Premier Solicitors will provide an initial response to any such challenge free of charge.

Thereafter, if litigation ensues, and Premier Solicitors/Counsel believe that there is a reasonable chance of success in defeating any such challenge, Premier Solicitors would act for your Trustees on a no win no fee basis.

No. The value of your property will still form part of your Estate for Inheritance Tax (IHT) purposes as you retain the right to live in the property for your lifetime.

If the value of your property is more than £325,000 (or £650,000 for a couple who own a property in equal shares) then there will be an immediate IHT charge of 20% of the value in excess of £325,000/£650,000.

If your HPT continues for 10 years or more then there may be an anniversary charge due at year 10 and, if the value of the Trust Fund at year 10 exceeds the value of the nil rate band at year 10, the IHT charge would be a maximum of 6% of the value of the Trust Fund. This charge occurs on every tenth anniversary of the Trust. There may be an IHT exit charge payable when your property leaves the HPT.

It is unlikely that the residence nil rate band will apply to the HPT on your death as the legal title of the property passes to your Trustees on creation of the HPT. However, depending on the circumstances, it may be possible for any unused residence nil rate band to be carried forward so that it can be claimed on any surviving spouse's death.

No. If you place your property within a HPT then your Trustees can dispose of your property in accordance with your wishes immediately following the death of the last Settlor and do not need a Grant of Probate to enable them to do so.

Assuming your HPT only consists of your main property, it will not be necessary to register your HPT with HMRC on creation. However, if the nature of your HPT changes (i.e. your property is sold, rented out, investments are placed etc.) then your Trustees will need to register your HPT with HMRC immediately at that point.

We strongly advise your Trustees to contact Premier Solicitors as soon as any significant event happens (or the nature of the Trust changes) so that they can be advised accordingly.

There is no need for your Trustees to complete complex Minutes but your HPT should be reviewed on an annual basis and a note of the same made by your Trustees. Your Trustees should formally record any significant decisions or any time they exercise any of their powers in respect of the HPT.

Provided the HPT only contains your property, and there no income generated, there is no need for your Trustees to complete annual Trust Tax Returns. However, if this position changes, we strongly advise that your Trustees contact Premier Solicitors for advice.

Yes. Provided your Trustees agree, the HPT can be wound up and the property transferred back into your name.

If there is a surviving Settlor, the Trustees will continue to manage the Home Protection Trust until the second of your deaths. If there are no surviving settlors the Trustees will either sell the property or transfer it to the beneficiaries in accordance with your wishes.

Nothing. Your Trustees have control over your home and so, if necessary, they can sell it and invest the net sale proceeds on your behalf. Any income that subsequently arises would be payable to you for your lifetime. Your trustees could also rent out your property.

If your property is not in a HPT and you lose capacity (without having a registered Lasting Power of Attorney) your family would need to make an application to the Court of Protection for a Deputyship Order before they could deal with the property on your behalf. This application is expensive, time consuming and entirely avoidable (at least in respect of your property) if you place your property in a HPT.

If you haven’t already got a Will then we strongly advise that you get all of your affairs in order at this stage. If you already have a Will, we recommend that you review this in conjunction with having your HPT prepared.

Once your HPT has been finalised, your property will pass in accordance with the terms of the HPT and will not therefore pass under your Will. It is therefore important that you consider having your Wills prepared/reviewed at the same time. Your Goodwills Estate Planning Practitioner is able to deal with this for you.

No, however we strongly recommend that this area is reviewed to ensure that other areas of your life are not impacted by not having Lasting Powers of Attorney in place. Your Goodwills Estate Planning Practitioner is able to assist you with this.

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Goodwills Trusted Outcomes Ltd, Fairfield Enterprise Centre, Lincoln Way, Louth, LN11 0LS. Covering Louth, East Lindsey and surrounding areas.

goodwills@trustedoutcomes.co.uk

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