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Asset Protection

Asset Protection & Property Protective Trusts

Asset Protection

An Asset Protection Trust (also known as a Lifetime Discretional Trust or Living Trust) enables you to leave your family the majority of their inheritance in Trust, ensuring it goes to them and not to someone else or another institution.

The Trust is essentially a safety deposit box, where you can place your property and any other financial assets. The Trust is setup whilst you are alive and will protect your assets from future threats. When you die the Trust is then transferred to your chosen beneficiaries.

The advantage of a Trust is that you are the owner of the Trust whilst you are alive. The assets remain yours, and so unlike transferring to relatives, you remain in control. You are the owner of the Trust and you are also a trustee and beneficiary of your own Trust.

You can still sell, move or use your assets when in Trust as they belong to you.

Why should you consider a Trust?

Many people worry about the rising cost of care home fees and the possibility that there will be nothing left to leave to their families when they die because it will all have been spent on care.

A home is many people’s most valuable asset and after working hard to buy your home and pay off your mortgage, it is frustrating and heart breaking to see your home having to be sold to cover ever increasing care costs. Unfortunately, paying for residential care in a care home is expensive but many people have no choice in the matter. If you have income and assets, and particularly if you own a property, you will pay at least part and possibly full residential care home fees (known as self-funding).

Many people consider whether they should just transfer their property into the names of their children and simply give it away. There are many risks with this which could potentially end up in you losing your home to someone other than the person you gave it to e.g. because of bankruptcy, divorce, death etc.

In the right circumstances, a Trust can be a way of providing a gift to those who you intend whilst still enjoying the use of the property and protecting property or other assets to pass on to your loved ones in the right way and at the right time for them.

 

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What are the benefits of an Asset Protection Trust?

One of the main benefits of a Trust is that there is no requirement for probate. With the average cost of probate being 4% of the estate, a Trust offers a significant saving, not only in terms of money, but in actual time and effort it saves for loved ones at a stressful time. Assets held in Trust are usually transferred in a matter of weeks.

Assets held within Trust are disregarded during any care fees means assessment. In order for local authority to successfully contest the Trust they have to prove the client deliberately deprived themselves of assets in order to avoid paying for care. As long as you are reasonably fit and healthy when the Trust is setup, the Local Authority can’t assume that avoiding paying for care was the purpose.

Assets held within Trust are also protected from remarriage. Incorporating a Protective Property Trust along with an Asset Protection Trust If the deceased’s spouse remarries means that the inheritance would not pass to another family.

A Trust also enables parents to pass on the inheritance without creating any inheritance tax liability. Assets held in Trust will not form part of the beneficiary’s estate so will not attract inheritance tax issues.

Ultimately a Trust can be a fair way to ensure your most valuable assets are protected throughout your lifetime and that they go to the people you had intended in the event of your death.

Protective Property Trust

As more and more people are living to an older age, a major concern is the ever-growing cost of care should they need it. There is also the danger that a remarriage could mean that money goes to another family against the will of the person. In such cases, their home could be used as the funding.

In the event of the first death of either partner, your home will default to the surviving spouse. If the survivor then goes into care or gets remarried, your inheritance could be at risk of going elsewhere. A Property Protection Trust can help you protect your share of the home and ensure that it is passed onto your loved ones as you intended.

How does a Protective Property Trust work?

A Protective Property Trust essentially enables you to safeguard your share of the property. The trust is activated when the will comes into force in the event of the testator dying.

The trust appoints a life-tenant, usually the spouse or partner, who has a right of residence in the property for the remainder of his or her life. A clause can be inserted so that the life interest ends upon remarriage. The trustees, often the children, cannot evict the life tenant. If later on in life the surviving spouse wants to sell the property, thereby releasing some equity, they can do so.

A Protective Property Trust ensures each child is guaranteed their planned inheritance or distribution of assets, ensuring that your part of the property goes to your children.

Having spent a lifetime saving hard to fund your property and repaying a mortgage, you would want to ensure that your children benefit.

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