If this is something that you can relate with, then the last thing that you want is to give the government a huge portion of your hard-earned money. You also won’t want your friends, family, or loved ones to wait months, if not years for the money that is rightfully theirs.
As a property investor, you’re not going to be able to completely avoid probate but avoiding some of the costs that come along with probate is actually easier than you might think. Here’s how you do that:
Get a Protective Property Trust
The best and easiest way for you to avoid all of the hassles that come with Landlord probate would be for you to set up a Protective Property Trust. A trust is seen as being complementary to a will. A will distributes your assets when you die, but a trust puts your property or any assets you might have, into a trust.
You can then name a trustee to handle it for you. The great thing about this is that you can avoid Landlord probate in its entirety because the property and any assets have been distributed to the trust already.
Although you should have a will, it does come with a drawback. The drawback of a will is that you have to seek a grant of probate through the legal courts. The court fees are a few hundred pounds, but it’s more the stress of going to court that you want your family to avoid if possible.
With a trust those assets would then be made available to trustees in a quicker and more straightforward way. However as a word of caution there are a number of other trust types and they all have stringent rules on what property types can go into them. Basically you’re better off seeking legal guidance, which of course we can help with here at Legacy Guardians.
Another way for you to make sure that your property remains out of probate would be for you to hold the property in a joint name. If you and your significant other are debating about purchasing your first home or even a rental property, then owning it jointly gives you the chance to pass the property to your loved one without probate.
There are two joint property ‘types’; tenants in common and joint tenants.
If your estate is under the nil rate thresholds and you are fine with your partner passing your property on to whomever they like after death then joint tenants is a good and simple way to go.
However those with complicated estates and complicated family circumstances might want to reconsider joint tenancies, as it could mean your own children end up with less if your partner remarries and has other children or step children.
You also need to consider that if your partner owns the property fully, without a trust holding half, that the government could force a sale of the property in order to move into care. When they don’t own the full property this cannot be enforced.
Another word of warning though, if you set up a trust too late, the government could overturn that if they thought it was done just to avoid care fees. So make sure you get it set up when you’re fit and healthy for the best outcome.
Finally think about the surviving partners pension, if they fully inherit properties it might push their earnings over into the higher rate taxpayer band. With a trust they can pay some of the earnings to the trust but most importantly your partner has lifetime benefit so they can make that decision either way.
So what we’re basically saying here is, you can own things joint tenants, but if you’re a landlord, it’s probably not the correct structure for you.
Name a Beneficiary
It is super easy for you to name a beneficiary on some of your accounts. Just because you have a will though, doesn’t mean that you will be able to pass everything down to them with ease.
Most people don’t realise that most assets will come with the option to add a beneficiary in your account settings. This may sound simple but it’s something that most people actually overlook. You can add a beneficiary to your bank account, retirement plan, investment, life insurance policy, stocks, and more.
The best thing about doing this? You don’t have to worry about going through probate at all. It’s that simple, and it’s a fantastic way for you to ensure that your loved ones actually get what is owed to them. With our legacy alerts, all of this is highlighted to you in an easy and straightforward way when you detail your assets in your vault.
Get in touch
Here at Legacy Guardians, we’re building a team of Specialist Property Administrators focused on organising Landlords’ important documents into a Digital Vault; with the ultimate aim of supporting their loved ones through Probate Administration after they pass away.
But more than that, once everything is uploaded we can help keep you organised for the dreaded HMRC tax investigation and hopefully look to give you some help with planning for retirement and inheritance tax.
Best of all, once live we’re hopefully going to offer free specialist landlord wills and £500,000 in free landlord probate administration.