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24/10/2011 14:23:40 www.clicklegalservices.co.uk Administrator Posts: 374	The BBC's "Inside Out" documentary is about to run a programme dealing with the setting up of "Asset Protection Trusts" or "Family Protection Trusts" (or whatever they are called by the various providers). Trusts and Gifts - Pros and Cons If a person goes into local authority care, Government Regulations presently state that no person is to be assessed as being unable to pay (care home fees) - if their capital exceeds (presently in England) £23,250. In other words if their capital exceeds £23,250, they are liable to pay. 1. Setting up a Trust can protect assets - investments, property and cash - even if they do not own their home. Assets held “in trust” can be disregarded for care assessment purposes – provided (A) the trust is set up properly; (B) is not done simply to avoid nursing home charges; and (C) the assets are appropriately ‘ring-fenced’ in time - but subject to the below. 2. Having Solicitors as Trustees ensures that your assets within the Trust benefit those that you specifically want it to. 3. Whether it is an outright gift - or the creation of a Trust - does not really matter in most cases though – what does matter, is the purpose of the transfer into the Trust or the gift. 4. Regulations also provide for the recovery of care home fees where assets have been disposed of “knowingly and with the intention of avoiding charges for the accommodation” by a resident (whilst residing in care - or not more than 6 months prior to going into care). A person still may be treated as “possessing” capital (even if they have deprived themselves of it) though. Therefore, even if the creation of the Trust or the Transfer/Gift took place more than 6 months prior to going into care - then the capital disposed of - could still be assessed as if it was still in their possession. There are therefore anti-avoidance measures in relation to means-testing eligibility. 5. There is no guaranteed or easy way of drafting a Trust so as to put the assets beyond Local Authority assessment (and if that is the intention it is unlikely to work - if the intention is “deprivation of assets” – and/or whether within 6 months of going into care) then no amount of legal drafting will work. 6. If you need to move into a home afterwards - but do not have the resources to pay for their care - because of the gift, then the local authority may pay only for the basic level of care, leaving you to rely upon others to enable you to move into a home of your choice. Is this what you want? 7. Whether or not a Trust is used, it is liable to be treated as a “disposition of an asset” - and it is always a risk to give away your main asset. 8. Whether the local authority will treat it as a “deprivation of an asset” though is decided on an individual basis. Both a gift and a gift to trustees can amount to a “deprivation”. 9. The person concerned has to be “capable” of creating such a Trust/Gift. If they are unlikely to be able to appreciate what they are doing, then this may not be possible. 10. If their child gets divorced - the property would on the face of it, be part of the financial settlement in that divorce 11. The person you gift to may not provide the support expected, i.e. by not “topping up” care fees - or by moving you prematurely into a care home; in order to occupy or sell your home. Is this what you want? 12. If they die - or run into financial difficulties but you continue to live in the gifted home, you may be made homeless. Is this what you want? 13. The relationship between you and the person you gift to, can break down, with their occasionally putting pressure on you to “cash in” - or raise money on the gift. Is this what you want? 14. If you transfer your home, you may be deprived of the opportunity of downsizing, or releasing equity - so you may be left with no option but to move into a care home. Is this what you want? 15. However, compare the cost of the work involved in making a Gift/Trust - compared to the average cost per week in a typical nursing home? There is no clear answer to all of this. Everything turns on the individual facts. The sooner you “donate” – or put assets into a Trust as part of a structured inheritance tax plan or for some other plausible and justifiable reason - and not simply to avoid home charges, then the better chance you have of being protected. But once you “give”, you cannot take back. A lot to consider. This and other matters are contained in our free guide - contents below. 1. 10 Reasons To Make A Will 2. 15 Reasons To Change Your Will 3. Usual Questions 4. Jargon Explained 5. Nursing Home Charges 6. How To Deal With An Estate 7. Powers of Attorney 8. Inheritance Tax Planning 9. Challenging A Will 10. Leaving Everything to The Government 11. Equity Release 12. Will Review Sheet 13. Other Services
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18/11/2011 13:53:54 horace Posts: 2	thanks for your help this is really useful
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