Sadly, thousands of people have been mis-sold so-called ‘Asset Protection Trusts’ aimed at protecting assets (usually people’s homes) from being sold to pay for care home fees.
The average cost of a residential care home in the UK is over £1,000 per week and the price of residential nursing homes (supervision by a qualified nurse at all times) is even higher. It is therefore a concern for many that if they do have to go into a care home then their property may be sold to pay for their care. Ultimately this means that there is very little left for their family to inherit on death.
Unfortunately, some (usually unregulated) companies advise clients that putting their home into trust during their lifetime will protect them from this. However, not only is this incorrect but there are legal consequences of doing so which are not always favourable.
If you transfer a property into trust then it will not protect it from the impact of care home fees, if the intention behind transferring it into trust was to avoid paying for care. This is considered a ‘deprivation of capital’ and the local authority assessing your financial contribution towards the costs of your care will factor the property into the calculation as though you still own it.
Transferring a property into trust in your lifetime also means that it is no longer yours, as the legal ownership will have passed to the trustees. This can cause issues if you later come to sell the property.
Of course, if you transfer the property into trust in your lifetime and then continue living in it you won’t have fully transferred (or gifted) the property as you still have the benefit of living there. This can cause problems on death for inheritance tax and makes sorting your affairs out more difficult and time consuming for your loved ones.
There are other safer ways to protect your property, such as creating a Life Interest Trust Will, which is discussed further in the following blog:- Life Interest Trust Wills- Protecting Your Property.
How Can Timms Help?
If you would like any further information on how to protect your property, please contact me via email on s.wildsmith@timms-law.com or via telephone on 01283 214 231.
