After a lifetime of paying taxes, most of us would expect care to be provided when required in later life. Well, the good news is that will be. The bad news is that it is means tested. If you have assets valued over £23,500, including your house and savings, then you will be expected to pay for that care yourself.

With care home fees running at around £25,000 to £55,000 per annum, it does not take long for even a healthy nest egg accumulated over a lifetime’s hard work, investment and prudence to disappear entirely. This money was supposed to pass to your children and grand-children.

  • Did you know that 1 in 3 women and 1 in 4 men over 65 will go into care?
  • Did you know that your Council can take all your assets including your house to pay for the care?
  • Only the last £14,500 is protected!

What can be done to protect my estate for my children?

You have options: –

1. You could do nothing and hope for the best. This is not what we would recommend. 

2. You could transfer your assets to your family. By doing this you may protect your assets but you lose control. There are many things that can go wrong with this, your family may have to pay Capital Gains Tax on the asset, they may get divorced or go bankrupt, (possibly resulting in you losing your home) or simply fall out.  Again, this does not recommend it may be challenged under the Depravation of Assets Rule contained in the Care Act

3. You could buy an Immediate Care Cost Insurance Plan. Very expensive, this measure does not avoid Probate costs.

4. Or you could transfer your assets including your house into a Family Protection Trust. This allows you to have total control over your estate.

What is the family 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…but why?     

Placing your assets into a Family Protection Trust will ensure that they pass to the people you choose after your death, according to the terms of the Trust, or under the terms of your Will. 

The inheritance due to any unreliable beneficiaries can be protected by the 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.

The value of the Trust won’t 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 and without having to apply for a Grant of Probate.      

But my family will deal with things after my death?

The procedures that your family has to follow when you die are often not as straight forward as you might expect. If your Will contains a Trust for example, this needs to be managed too. The cost incurred by your executors in gaining specialist help from a solicitor or bank could run into many thousands of pounds. Banks typically charge between 3% and 5% of the whole value of the estate. We recommend our partner King Court whom are very reasonably priced and well below legal practitioners and well below the banks        

Even if the family decides to take on the job, the process involved in applying for the Grant of Probate can be a very lengthy, time consuming and frustrating job. Your family may not have access to any part of your estate for up to a year or even longer in some cases.      

The cost of care

If you own assets above £23,250 (2013) and need residential care in later life you are expected to pay ALL the costs and may have to sell assets such as your home in certain circumstances. However, if you have already placed your assets in to a Family Protection Trust it is highly unlikely that they can be used toward these costs.    

 But my family will look after me?

Hopefully you will never need to go into residential care but unfortunately 1 in 3 women and 1 in 4 men over the age of 65 do go into residential care so it can never be ruled out. 

We are all living longer, and so the chances that we might need residential care later in life are increasing. Whilst family often start out with the best of intentions in wishing to take care of you, in reality it could be quite a difficult task and may not always be a realistic option. Moving into residential care often happens after suffering a fall at home or as a result of other previous health problems; the decision is sometimes taken out of your control.        

 Is it worth it?

Placing assets into a Family Protection Trust reduces any costs in relation to administering your estate, and potentially saves your estate being eroded by around £25,000 to £55,000 a year (the average cost of residential care in England and Wales). Doing nothing will mean extra costs and additional work for your family, and the loss of further assets before your death if you need long term residential care.  The cost of a trust is usually less than the cost of one month in a residential care home, and less than the cost of probate through a bank or solicitor.

Who should be the trustees of my family protection trust?

TruWills and Trusts Tel 0191 6011226 will draw up the Trust Deed via their trusted Barristers. Part of the fact finding questionnaire carried out by our consultants in the comfort of your own home will be to appoint Trustees, Trustees are usually family members whom can also be the benefactors of the Trust.           

You control the Trustees – you can appoint new Trustees and remove existing ones if you wish to do so.  HAVE YOU CONTROL

In most cases you will be a trustee of your own trust so you clearly remain in complete control. 

Yes – since YOU control the Trust you can transfer all or some of the assets back into your name at any time. Transferring a property would entail a conveyance fee, much the same as any transfer of property. Cash investments may be subject to a product provider standard terms of business, but there will be no charge by the Trustees.

What happens if one of us dies?

Nothing – the Trust, and the protection it gives, simply continues as before until the second person dies. The survivor continues to retain the benefit of the Trust.

 What happens if one of the trustees dies?

A new Trustee is simply appointed to act in his/her place – this would of course be someone of your choosing.

 Do I still need to make a will and a lasting power of attorney?

Anything you put into the Trust will be distributed in accordance with your expressed wishes and normally in accordance with your Will. The Will also distributes anything you own when you die that you haven’t put into Trust.
The Lasting Power of Attorney document still enables your appointed people (Attorneys) to manage what you didn’t put into the Trust whilst you are alive but are unable to manage yourself. 

 Who can set up a family trust?

Any person who is mentally capable of making such decisions.

 What type of assets can be placed within the trust?

Commonly, clients place their house and savings within the Trust.

So in Short with a Trust you can achieve the following

Take advantage of our service that makes sense for everybody – not just the affluent

• Keep control of their most valuable assets

• Protect their property for the benefit of their loved ones

• Protect their assets from bankruptcy, creditors and strangers

• Potential saving on future Probate costs

• Potential saving on cascading Inheritance Tax

• Use a product with a proven pedigree dating back centuries

• Preserve their wealth and don’t leave their future to chance

Ready to talk?

Get expert advice, call us today on 07481 010228