care home fee avoidance - how do Lifetime trusts help?
Are you concerned about losing your assets to fund care home costs? If you are, you wouldn't be alone. According to the latest statistics, a third of women over 65 and a quarter of men over 65 are likely to go into care. And if you do, the Local Authority can take a large contribution from your assets to pay for the costs. That includes your home. With the average cost of care reaching more than £1,000 per week, and the average stay lasting 3 years, the calculations are simple. You could be facing costs in excess of £156,000 and the Local Authority have the right to use your assets to pay for these costs.
If you are worried about the implications of paying for your own care home costs, or you are worried about the impact this might have on somebody close to you, such as your parents, siblings or close friends, we have written this advice for you.
We are Private Will Services and our mission is to protect our customers from becoming disadvantaged in the event of life changing circumstances.
have you heard of a lifetime trust?
A Lifetime Trust, just like a Property Protection Trust, enables you to protect your property or assets whilst you are alive. Another name for these types of Trusts is a Family Asset Protection Trust. 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.
WHO IS A LIFETIME/property protection TRUST SUITABLE FOR?
A Lifetime Trust is for any person who understands their assets and who is mentally capable of making decisions on them. The Mental Capacity Act 2005 presumes that a person has capacity unless there is evidence to the contrary.
This can be a single person or a married couple. The younger the age that this is done the better.
- The Trusts help pass inheritance down to children.
- There is no requirement of probate after death for the assets in a Lifetime Trust.
- Should the Government re-introduce the proposed 2017 probate fees, assets in a Lifetime Trust may save your family several thousands of pounds in probate fees.
- People can continue to live in property that has been placed in a Lifetime Trust.
- They can downsize from property placed in a Lifetime Trust.
- Property Protection Trusts can offer protection from having to sell your home to pay for care home costs.
- Lifetime Trusts can provide protection from creditors and claimants.
- Family Protection Trusts can protect assets from re-marriage by the widow/widower.
Examples of the Benefits
If your children inherit and subsequently divorce, their son-in-law or daughter-in-law could walk away with a large portion of your estate disinheriting their grandchildren. A Lifetime Trust avoids these problems by ring-fencing your assets for your chosen beneficiaries; no-one but those named can benefit and their children and grandchildren's assets held within the Trust are protected in the event of a divorce.
If you or a child of yours are in business and wish to safeguard personal assets from future unforeseen business debts, then the Lifetime Trust can help keep them safe. It does not prevent bankruptcy, but it can avoid the assets held within the Trust being taken to satisfy the bankruptcy. This also can apply to subsequent generations should even grandchildren suffer financial difficulties.
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.
Therefore, the important piece of information to take away from this guide is – whatever you decide to do about protecting and preserving your assets, do it early.
we can help set up your trust today
We are a STEP Qualified Wills & Trust company based in Hampshire, and we are members of the Institute of Professional Will Writers. We operate under a code approved by the Trading Standards Institute. We look after many clients interests by providing the right Wills and Trusts. In our experience, dealing with the need for care is overwhelming in itself, without the added burden of managing your assets at the same time.
read more about will trusts & deprivation of assets in our blog
we offer a UNIQUE MONEY BACK GUARANTEE
Included within our fees for setting up a Lifetime Trust is a Money Back Guarantee of £3,000 - plus £500 for Legal Expenses in the event that a local authority successfully challenges the trust in respect of the property. This indemnity is from an Insurer for the lifetime of the Trust, providing you do not engage directly with the local authority and instead leave it to the Trust's solicitors to handle such matters.
Don't Just Take our word for it...
Mrs W transferred her property into Protective Property Trust and we obtained consent from their mortgage provider to do so. When Mrs W was admitted into Residential Care, the Council attempted to recover the costs against the property but we successfully argued the clients case and it was disregarded for Care CostsMrs W
Mr B was in his 80’s when he set up his Family Protection Trust. When the property was transferred into Trust and Mr B went into care, the Local Authority met the Care Costs and did not attempt to recover any of the costs from the property within the Trust. The house was therefore saved and Mr B will avoid probate costs at a later dateMr B
Mrs G owned her house with a small mortgage. Her son and daughter were concerned about care costs and probate costs and therefore sought our advice. We set up a Family Protection Trust but the mortgage needed to be cleared first. The son and daughter put up the funds to pay off the mortgage. The Trustees gave them a Security over the property. The Trust worked and the house was protected. When Mrs G went into care the Trustees sold the property. The son and daughter were repaid the morgage money. The balance was retained in the Trust for Mrs G’s welfare.Mrs G