Home and Lifesavings family asset

Placing your home and lifesavings into a family asset protection trust can be a more secure way of transferring property than gifting. By retaining control over any assets, trustees can prevent it from being abused or lost by beneficiaries who find themselves in a vulnerable position or who lack the maturity to manage their own finances. As a trustee, you will be able to continue living in any house placed in the trust if you choose to, and upon your death, the beneficiaries of the trust will be able to inherit it

A family asset protection trust can be set up as either a discretionary trust or as an interest-in-possession trust. With a discretionary trust, the trustee or trustees have a list of beneficiaries named by the settlor, but retain the right to decide which of these beneficiaries are to benefit, how much they should receive, and when.

The Benefits of Setting Up an Asset Protection Trust

Placing money or property in an asset protection trust may help to reduce your inheritance tax liabilities, although it will usually be considered part of your estate.

Setting up a trust will, however, avoid the possibility of prolonged probate administration and protect your assets against redistribution claims by those excluded from your will. Assets placed into the trust will be automatically transferred to the named beneficiaries by the trustees. By nominating a trustee, you can also decide who disposes of and manages your assets to avoid confusion. You can name yourself as a trustee, but there must be at least one other person empowered to act on your behalf, and this can be one of our solicitors if you choose.

Another potential benefit is the avoidance of ‘sideways inheritance’, whereby assets pass to your spouse who then remarries and bequeaths those assets to his or her new family rather than the recipients you intended.

Avoidance of Care Fees

Anyone interested in setting up an asset protection trust for the purposes of avoiding care fees in later life should be aware of the significant risks associated with this course of action. Local Authorities will conduct a financial assessment of anyone applying for state assistance, and those with capital worth more than £23,250 (increasing to £123,000 in April 2017) will be found ineligible. Transferring property into a trust for the benefit of family members may be considered ‘intentional deprivation’ if it is done with the intention of reducing the settlor’s capital to below this threshold in order to receive assistance. In which case, the assessment will consider the property in question to still belong to the settlor.

Given the dangers involved with this course of action, anyone thinking about setting up an asset protection trust for the purposes of avoiding care fees should get expert legal advice as a necessity. Time is also a factor; the earlier assets can be placed in the trust, the less likely a Local Authority will infer intentional deprivation.

Our experienced team of financial and legal consultants work with clients on an individual basis to guarantee that you receive the best and most relevant advice possible on how to set up a family asset protection trust. We will ensure that the best provisions are made for yourself and your family, whether they are required now, or in the future. We take care to provide accurate and practical advice in the most straightforward way so that you understand every step of the process.