Basic Will vs. Trust Will: Which is Right for You?

Most people know they need a Will, but what they don't know is that there are two types. A Basic Will is simple and effective. A Property Protection Trust (PPT) Will suits some homeowners better, particularly those who want their share of the home to reach their children. This article explains both to help you decide which one is right for you.

What is a Basic Will?

A basic will is the cornerstone of any estate plan, outlining exactly how you want your assets distributed after you're gone. It's a foundational legal document that serves a few critical purposes:

• Asset Distribution: Dictates who inherits your property, money, and possessions.
• Guardian Appointment: Names legal guardians for your minor children.
• Executor Designation: Appoints someone to manage and settle your estate.
• Funeral Wishes: Allows you to include your preferences for funeral arrangements.

How a Basic Will Works:

When you pass away with a basic will, your assets are typically passed directly to the beneficiaries you've named in the document. For many married couples, this means everything goes to the surviving spouse, and then to the children after both parents have died. While this process seems simple, it can leave your estate surprisingly vulnerable.

What is a Property Protection Trust (PPT) Will?

A Property Protection Trust Will, also known as a Protective Property Trust Will, is an estate planning tool designed to safeguard a person's share of their property, typically the family home. Unlike a basic will where assets are directly passed to beneficiaries, a PPT Will places the assets into a trust. This provides an additional layer of protection and control.  

Key features of a PPT Will include:

• Protection for your share: When you die, your share of the home is held in trust rather than given to your partner outright, so it still reaches the people you chose if your partner remarries or makes a new will.
• Flexibility: It allows the surviving spouse to continue living in the family home for their lifetime, ensuring they are not displaced.  
• Bloodline Protection: This type of will ensures that your assets are eventually passed down to your chosen beneficiaries, often children from a previous relationship, protecting their inheritance.

The Advantages of PPT Wills Over Basic Will

• Care fees, what it can and cannot do: When you die, your share is held in trust rather than given to your partner outright, so it is not normally counted as their money if they later need care. Their own share is still counted, a PPT does nothing for your share while you are alive, and arrangements made to avoid care costs can be challenged as deprivation of assets. No will can guarantee protection from care fees.
• Remarriage Protection: It ensures that your share of assets goes to your chosen beneficiaries, even if your surviving spouse remarries. This prevents your assets from potentially passing to their new spouse and their family.
• Sideways Disinheritance Prevention: This is a crucial benefit, especially in second marriages. A PPT ensures that your share of the property is held in trust for your children or other chosen beneficiaries. This prevents your share from being passed to a new spouse and their family if the surviving partner remarries, ensuring your assets remain within your bloodline.

How PPT Wills Work in Practice

1. The Trigger: The death of the first spouse is the event that activates the trust provisions in the PPT Will.
2. Property Division: The deceased spouse's share of the property, which is commonly 50%, does not go directly to the surviving spouse. Instead, it is transferred into a trust.
3. Surviving Spouse's Rights: The trust is designed to protect the surviving spouse while they are alive. The provisions typically allow them to:
   • Continue living in the property for the rest of their life.
   • Move to a new home if they need to, with the deceased's share of the property value still being held within the trust.
4. What the trust protects: Your share is kept in the trust, so your partner cannot leave it elsewhere in their own will and it cannot pass to a new spouse. It does not stop your partner's own share being counted if they need care, and it is not a way to save tax.
5. Flexibility: While the assets are protected, the trust is structured to allow for flexibility, such as the ability to move home.
6. Ultimate Beneficiaries: The core purpose of the trust is to ensure that the deceased's share of the property is ultimately preserved and passed on to their chosen beneficiaries, typically their children, after the surviving spouse also passes away.

Who Should Consider a PPT Will?

A trust is a powerful tool to protect your home and assets, especially for:

• Homeowners with significant equity
• Parents who want to secure their child's inheritance
• Blended families managing assets across households

Important Considerations

While PPT Wills offer several advantages, there are considerations that should always be kept in mind:

• Complexity: PPT Wills are more complex and require careful drafting compared to a basic will.
• Trust Administration: You will need to appoint trustees, and they may have to take specific actions that wouldn't be necessary with a basic will.
• Property Ownership: A PPT only works if you own your home as tenants in common. If you own it as joint tenants, your share passes to your partner automatically whatever your will says, so the joint tenancy must be severed first. SimpleLPA includes the notice of severance and the HM Land Registry form that records it.
• Professional Advice: Take advice if your situation is complicated, for example business assets, property abroad, or care that is already likely.
• Tax: A PPT is not a tax-saving device. For most couples the inheritance tax result is much the same as leaving everything to each other.

Making the Right Choice for Your Family

When choosing the right will for your family, it's important to weigh the benefits of a Basic Will against a Property Protection Trust (PPT) Will. A Basic Will is a good starting point; a PPT Will gives you more control over where your share of the home ends up.

A PPT Will costs more and is more complex than a Basic Will, so it is worth it when keeping your share of the home for particular people matters to you. It gives peace of mind that your share will be passed down to your children as you intend.

To decide which option is right for you, consider these factors:

• The value of your assets, especially your home.
• Your family structure and relationships.
• Whether you and your partner own your home as joint tenants or tenants in common.
• Your desire to protect your children's inheritance.

Closing Thoughts

Estate planning is about more than just distributing assets; it's about protecting your loved ones and securing their future.

A Basic Will is a good starting point. A PPT gives you more say over where your share of the home ends up.

A PPT Will protects against sideways disinheritance: your share reaching a new spouse or their family instead of your children. That is why it suits blended families and anyone who wants to be sure where their share of the home goes.

Protecting your assets is a critical piece of the puzzle, but true peace of mind comes from a complete plan. This includes considering who would make crucial health and financial decisions for you if an accident or illness left you unable to. For this, a Lasting Power of Attorney (LPA) is the essential legal tool.

Now you have a better understanding of both options, you can make an informed decision to provide the best protection for your family.