What is a Lifetime Trust?
Whether you call them ‘Asset Protection Lifetime Trusts’, ‘Asset Protection Trusts’, Family Protection Trusts’, or ‘Property Protection Trusts’, a Lifetime Trust is an instrument which enables you to protect your property or assets whilst you are alive. Unlike Will Trusts which come into force on your death, a Lifetime Trust allows you to gift your property or assets into a Trust and you are allowed to carry on using the asset and living in the property. The advantages in doing this are many and varied.
Reducing Probate Costs
You can set up a Lifetime Trust and transfer the bulk of your assets (if under £300,000) into that Trust. If you do so, then when you die there will be no probate required and therefore no probate costs. If the Government do enact the Probate charges they postponed in 2017, this could be a saving of several thousand pounds. Your estate may also be administered right away.
For a couple, when one person dies, the survivor will typically have the benefit of the deceased person’s assets. If the survivor re-marries then those assets may pass to a new spouse. By placing assets in a Lifetime Trust before death, this removes the 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 forward and claim a share of your estate. For those assets placed in a Lifetime Trust, then they are protected from these claims.
Children Inheriting At The Wrong Time
Unfortunately it is not uncommon for someone in a family to have problems such as alcohol, drug, gambling, volatile marriages or inheritance tax problems. 1 in 2 marriages ends in divorce. Assets placed in a Lifetime Trust, can have discretionary rules put in place as to when an inheritance is passed on.
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. For the next generation aged between 45 and 65 it is anticipated that 1 in 2 will go into care. Assets held in Trust are normally disregarded for care purposes provided that the Trust has been set up correctly and the assets ‘ring-fenced’ at the right time. If you were fit and healthy when setting up the Trust and could not have foreseen the need for care then the local Authority cannot make the assumption that your motive in setting up the Lifetime Trust was to avoid care home fees. For more information on how you can protect your assets from care home fees, please visit our further information page here
WHAT IS A LIFETIME 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 Lifetime Trust established in your name and for your benefit whilst you are living. Sometimes this is referred to as an asset preservation 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 Lifetime Trust you can do so. The paperwork would be signed by the Trustees but there are no restrictions on you.
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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 Lifetime 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 Lifetime Trust the cost is £2,200. For two Lifetime Trusts the cost is £3,300.