If you are planning to afford your family and loved ones protection no matter what happens…
Maybe you should consider as part of your estate planning a family protection trust
Your Trust Made Easy
As part of your estate planning a family protection trust can be created to safeguard your assets and ensure they ultimately pass to the beneficiaries, no matter what happens.
Who Needs a Trust & Why?
A Trust is specifically designed to protect your assets during your lifetime and give you the peace of mind that they can be passed on securely and intact to your spouse, children and your blood line after your death. Any assets that you own can be added or removed from the Trust at any time your lifetime. Trust contents can include your family home, savings and other valuables.
What Is A Family Protection Trust?
Although your Family Protection Trust is a legal document it might help to think of it as a safety deposit box to safeguard your assets. As the owner of the Family Protextion Trust you are known as the “Settlor” and have the master key to the safe. Your “trustees” also have a key but cannot open it without your permission.
Placing money or property in a Family Protection Trust when you are reasonably fit and healthy and when the need for care is not foreseeable can provide protection from means testing as the Local Authority can’t assume that avoiding care costs was the sole purpose. Assets correctly held in a Family Protection Trust are usually excluded from means testing for state benefits. This means your home and other assets can be protected from third party claims on your estate.
It is important to be aware that a Family Protection Trust or any kind of trust set up during one’s life should not be established for the sole purpose of protecting a home from care fees.
Is My Will Not Enough?
A Will can only dispose of your assets when you die and therefore cannot protect your them whilst you are still alive. For example, the value of your estate may be eroded by having to pay for care fees, during your lifetime. Meaning there may be little, if anything left for your loved one’s when the Will is read.
By having your Trust in place now you can grow older having the peace of mind in the knowledge that your chosen trustee’s (this might be your children) can help to manage the Assets in the Trust if you are no longer capable.
Unfortunately, it is not uncommon for some beneficiaries to have problems for example a difficult marriage, State benefits, alcohol, drug or gambling problems and unable to manage good money.
In these circumstances a simple Will would not be enough, however Placing your assets in a Family Protection Trust will ensure assets can be managed on their behalf by your chosen trustee.
What Are The Benefits?
The benefits of a Family Protection Trust vary depending on a client’s needs. Some of the main advantages may be that…. Having a Family Protection Trust in place will avoid the prolonged probate administration and protect your assets against third party claims from those excluded from your will. Placing within a Trust may also may help to reduce your inheritance tax liabilities. A Family Protection Trust avoids ‘sideways disinheritance’, A situation where assets pass to your spouse who then remarries and leaves your assets to his or her new family rather than the recipients you intended. If your children inherit and subsequently divorce, your son or daughter in law could walk away with a large proportion of your estate disinheriting your grandchildren and or future generations.
If you have a disabled child or a beneficiary that is unable to work, inheriting through only a Will might mean the they could lose their benefits. Assets held within the trust are not classed as theirs and are therefore discounted from a means test.
Can I Give My Assets Away?
Historically many people gifted their home to their children or loved ones during their lifetime. sometimes to avoid care home fees or reduce inheritance tax but it is important to consider the following.
By gifting your home to your children, they become the legal owners of the property and should any of them divorce or become bankrupt you could lose your home
Equally If the person you have gifted your home to dies with or without a Will, their spouse would inherit your home. If the spouse were then to remarry then a stranger would legally own part of your home.
If the person you have gifted your home to already owns their own property they may be liable to pay capital gains tax on the property they have been gifted by you.
Placing your home and life savings into a family asset protection trust is a more secure way of transferring property than gifting. You retain full control over any assets during your lifetime.