Asset Protection Trusts

It is sensible for people to look ahead to their old age to see how they can protect their home against care fees, should they arise, so that they can have as much as possible left to leave to their children.  One way to do this is to look at an Asset Protection Trust.  However, this can be complicated, not for everyone, and it is vital to take the advice of a solicitor to avoid costly mistakes. 

The theory is that by putting a house into Trust and naming someone (usually children) as the Trustees, an individual no longer owns their home so should that person go into care, the property assets will not be used as part of the equation in a Local Authority means tested care funding assessment.  This can be a perfect plan to protect the inheritance of children and this is very true if the assets are transferred to a Trust early enough but there can be pitfalls. 

Local Authorities must carry out an individual assessment if someone needs a care home placement, and therefore they will look into matters to ensure that the Trust has not been set up simply as a way to get out of paying care home fees.  While there is no limit on the passage of time for a Local Authority to look into matters, if an individual can show that at the time the trust was set up they were in good health, financially stable and had no reason to expect that they would need to go into care, the Local Authority are not going to be able to say that the only reason why the Trust was set up was an act of “deliberate deprivation” to avoid having to pay care fees. 

Timing is the key issue.  When a person put the property into Trust, could they have reasonably known that they might need care?  For example, if the individual was already ill when they put the property into Trust, it could look suspiciously like “deliberate deprivation”.  However, a person placing a property into an Asset Protection Trust is simply taking advantage of using a very useful tool for protecting assets for the benefit of a family and so these things need to be done when the individual is in good health, financially solvent and has taken proper legal advice as to the setting up of the Trust. 

For further information on Asset Protection Trusts, please contact us.

Even if you are not considering an Asset Protection Trust at this stage, it is always a good idea to make sure that you have planned for your future by keeping your Will updated and possibly considering a Lasting Power of Attorney to assist in the smooth running of your affairs in the event that something happens during your lifetime that takes away your ability to look after your own affairs.  We can also advise concerning Wills and Lasting Powers of Attorney if you contact us.