Asset Protection Trusts – Beware!

It is unfortunate that many elderly people have to sell their homes in order to pay for care fees, when understandably; they may wish to leave their homes to their children. Indeed many children expect to inherit their parents’ homes.

Currently, if the value of a person’s estate is worth more than £23,000, they will be liable to pay for the cost of care themselves. This means that most people who own their own home will have to pay for their own care, even if they have to sell their home to raise the funds.

In recent years a number of companies have emerged who claim to be able to protect their clients’ homes from being sold if the owner needs to go into care, by setting up a “property trust” or “asset protection trust”. Put simply, these trusts purport to “ring fence” the value of the client’s home by putting it in a trust for someone else. In theory this means that the value of the home will not be included when the local authority assesses a person’s estate to determine how much that person should pay for their care home fees. The cost of setting up such a trust is typically several thousand pounds. However, elderly homeowners should exercise caution before signing up to such a scheme.

Whilst this may on the surface seem like a solution to avoiding care home fees, in practice, if you are found to have deliberately depleted your assets to avoid care fees, you will be treated as though the value of that depletion still forms part of your estate and therefore will still have to pay the fees.

Essentially, if you are found to have set up a trust to deliberately deprive yourself of the value of your home in anticipation of going into care, your home will be included in your assessment anyway. This means that the thousands of pounds you paid to set up the trust will have been wasted. Most of the companies which offer such trusts are completely unregulated. This means that clients who find themselves in this unfortunate situation have nowhere to turn and are unlikely to get that money back.

The law surrounding this issue is complex and ever-changing. However there are steps that can be taken to preserve the value of your estate and protect the interests of your loved ones as far as possible. Please contact our specialist solicitors today on 0161 615 5554 for honest, bespoke advice about how best to manage your estate and plan for the future.