Family Protection Trusts
Have you assets, including a house and savings valued in excess of £23,250? Do you want to protect a lifetime of hard work for the benefit of your children or chosen beneficiaries?
If you have answered ‘yes’ to these two questions you should consider the benefits of creating a Family Protection Trust.
Did you know that statistics show that 1 in 3 women and 1 in 4 men over 65 years old will go into care? With care home fees costing between £25,000 to £55,000 per annum, it wouldn’t take very long for even a healthy nest egg, a lifetime’s hard work, to be almost completely depleted. Only the last £14,250 would be protected!
What is a Family Protection Trust?
For most people, the greatest single asset worth protecting is the family home!
Think of a Family Protection Trust as a ‘ring fence’ around your assets which you can still make use of, add to, borrow from or pass down to your family/beneficiaries. Using a Trust provides the security and flexibility to avoid your assets being lost through the remarriage of a spouse when their partner has died or through a child’s failed marriage and other situations which are impossible to predict. Trusts are recognised by the courts and also by the Inland Revenue.
Children who may never be able to manage their own financial affairs are in particular need of having parents with the foresight to set up Trusts.
Trusts can be of greater benefit than ever in these days of blended families. Both sides usually intend to do the right thing but often one set of children end up being cut out entirely.
How can it protect my/our assets from potential care costs?
Whilst ‘ring fenced’ by a Family Protection Trust, the law regards your assets as ‘not being owned by you’ but by the Trust and therefore it is very difficult for anyone to take them from you.
Can I/we still live in my/our home and do I/we still have access to my/our money?
You are named as the ‘Principal Beneficiary’ of the Trust and you retain full control of the assets within it whilst you are alive and have mental capacity. You may move home or release equity from the Trust if you need it. You have a guaranteed right of occupation in the property for the remainder of your life.
Assets held in a trust are often disregarded for the assessment of care costs as long as the Trust has been set up correctly, at the right time (early enough) and protection from care fees isn’t a significant reason for creating the Trust.
What happens if I/we lose mental capacity?
If you are deemed to be ‘without mental capacity’ then the law states that you may no longer manage your own affairs and therefore your nominated Trustees can make decisions on your behalf providing that these decisions are deemed to be for your benefit.
Any assets outside of the Trust should be managed by people you nominate by creating a Lasting Power of Attorney, again, so that in the case of your mental incapacity they can make decisions regarding your finances.
What happens after my/our death(s)?
A Family Protection Trust is extremely flexible and can continue to protect your beneficiaries for 125 years from the date it is created. The Trust can either continue to hold the assets safely or pay them out to your specified beneficiaries.
What does it cost to create a Family Protection Trust?
The cost of creating a Family Protection Trust is £2,000 but when you consider the protection that it offers and also the cost of estate administration without it, it makes sense.
Another thought worth considering, is the value of an average priced property and as a percentage the £2000.00 is a small price to pay for its protection.