What is a Lifetime Will Trust?
Whether you call them ‘Family Protection Trusts’, ‘Property Protection Trusts’ or ‘Asset Protection Trusts’, a Lifetime Will Trust is an instrument which enables you to protect your property or assets whilst you are alive. Unlike Will Trusts which come in to being on your death, a Lifetime Trusts allows you to gift your property or assets in to a Trust but are allowed to carry on living in the property. The reason someone might want to do this are varied.
Reducing Probate Costs
You can set up a Lifetime Trust (we call it a Family Protection Trust) and transfer the bulk of your assets into that Trust. If you do so, then when you die there will be no probate procedure required and therefore no probate costs. Your estate can be administered right away.
If you are a couple then this problem can be avoided by each of you setting up a Family Protection Trust and transferring the bulk of your assets into the Trust. When one dies, the survivor will still have the benefit of that one’s assets but if the survivor re-marries then those assets will not pass to a new spouse and therefore there will be no risk of those assets being inherited by someone else’s family.
Dependant Relatives Claims When you die
Whether you have a Will or not, people can come out of the woodwork and claim a share of your estate.
Children Inheriting At The Wrong Time
Unfortunately it is not uncommon for a client’s children to have problems e.g. alcohol problems, drug problems, gambling problems, shaky marriages or inheritance tax problems. Remember 1 in 3 marriages ends in divorce. A child may also be vulnerable and easily led by others.
Incapacity As we get older
As each of us faces a significant risk that we will lose our ability to deal with our affairs as we age, then often the only remedy is to apply to the Court for an Order which is expensive, time consuming and usually does not really achieve the result that you wish.
Reducing the burden of Care Costs
At present 1 in 3 women over 65 and 1 in 4 men are likely to go into care. Even worse, of the next generation aged between 45 and 65 it is anticipated that 1 in 2 will go into care. It is possible to place your share of a property into a Lifetime Trust for the sole purpose of depriving the Local Authority of your assets to fund care home costs. This is what Which Magazine say on the issue.
The rationale is that if you need residential care at some point in the future, you no longer own a house and can only be assessed on minimal assets. Anyone considering setting up a lifetime trust for this reason should be aware that a local authority may regard this arrangement as ‘deliberate deprivation of assets’. If this is the case, they can assess you as if you still owned the property (and refuse to fund your care).
There are also Tax implications and it is imperative that you get professional and accurate advice in this regard. If you would like more information about Lifetime Will Trusts and how this can be used in regards to care home costs, please contact us on 02380 070 169
WHAT IS A FAMILY PROTECTION TRUST OR AN ASSET PROTECTION TRUST?
It might help to think of a Trust as a safety deposit box for you to keep your assets in. – You can pass your assets to a Family Protection Trust established in your name and for your benefit whilst you are living. Sometimes this is referred to as an asset preservation trust or you may regard it as a family asset trust holding your most valuable assets safe and secure.
Putting property in trust is a straight forward process once the Trust has been established. If you wish to move home after placing the house in to a Family Protection Trust you can do so. The paperwork would be signed by the Trustees but there are no restrictions on you.
WHAT TYPE OF ASSETS CAN BE PLACED WITHIN THE TRUST?
Commonly clients put their house in trust (or their share of it, if it is owned jointly) and most other savings/investments into the Trust.
Placing your assets into a Family Protection Trust should ensure that they pass to the people you want them to after your death, according to the terms of the Trust, or under the terms of your Will. The inheritance due to any unreliable beneficiary can be protected by the asset trust and be passed to them at a more appropriate time.
If you originally planned to leave everything to your surviving spouse or partner, but have children from a previous relationship or marriage that you would like to ultimately benefit, then the Trust can be used to protect their intended inheritance. Leaving property in trust keeps the assets safe when setting up a trust.
The value of the Trust will not be eroded by the cost of administering your estate (probate costs) or by the cost of residential care in later life, if needed.
When the Trust ends your Trustees will pass the assets to your beneficiaries without having to follow any complicated processes or procedures. It is a Trust that operates for you as a lifetime property protection trust.
COST OF SETTING UP A TRUST?
For a single Family Protection Trust the cost is £2,200. For two Family Protection Trusts the cost is £3,300.