For example, a married couple, who have not been
married before want to leave their share of their house
to their only child. They currently own the house as joint
tenants. Their Estate Planning Consultant would sever the
tenancy on the property registering them each as 50%
They then have their Wills written to represent that if one
died their half of the property would be held on Trust for
the benefit of their child but allowing the survivor to live in
their share of the property for life or a specified period of
When is it set up?
The trust would be set up on the death of the first
testator (the person who’s Will it is). Their half of the
property would be transferred into the trustees (person
or persons who will look after the share) name and
would be held until the second testator died.
What happens then?
On the death of the second testator the property would
then pass to their child and they would own the property
outright (in this case). If, for example, there was an
outstanding mortgage, or the property was to be sold
then they would receive any equity/capital and also an
income generated by the trust property.
What is the point?
As the couple are married and have a child then they
may think that the property would pass automatically if
something happened to them. If they were the registered
parents of the child then this is correct, but the trust will
guarantee the protection of the share of the asset for the
beneficiary. Without the trust, circumstances could arise
whereby after one spouse dies the other remarries and
then the child could be disinherited because the house
will have passed by survivorship. This will then
subsequently pass to the new spouse if the testator
died and possibly onto their own children or relatives.
With today’s blended marriages and relationships it is
often the case that stepchildren
or other family
members lose out when the new spouse walks away with
everything that the deceased spouse worked hard to
build up for their family. Children from previous
relationships can often be forgotten or ignored.
Does a PPT affect my mortgage?
No. Your mortgage will continue as normal.