Family Protection Trusts. What are they and are they right for me?
You may have heard through friends of an amazing scheme of giving away your home so that you won’t have to pay care home fees. It seems too good to be true, but you think well if they have done it why shouldn’t we?
As we are living longer, there is more emphasis on our need for extra care in our later years and if this cannot be provided at home it may mean a move into residential care. This, however, will usually come at a price and the only way to fund this cost will be the sale of your home.
So, the solution which is often suggested to “protect” your home is to put it into a Family Protection Trust or a Family Trust.
What is it exactly? The Trusts are often marketed and sold by Will writers or other organisations as a way to protect your home from being sold to pay for care home fees so you can leave it to your family.
The cost of setting up these trusts will often be several thousands of pounds and you will be assured that it will save you money and protect your assets in the future.
As the Trusts are provided by Will writers or others who may not have any formal legal qualifications and will not be regulated by a governing body this may leave you, as the client, open to abuse, incorrect advice, and substandard work. You will have NO form of redress should anything go wrong.
Many clients who we meet have been incorrectly advised as to the implications of creating a Family Protection Trust for example:
- The couple who have no children or other family members – a Family Protection Trust was of no real benefit to them, but they were sold one anyway
- Ongoing costs for the administration of the Trust (in addition to the initial costs charged) can be costly and will reduce the value of the Trust payable to the beneficiaries
- Challenges by the local authority on the basis of “deprivation of assets” when being financially assessed to receive funding for the payment of care home fees. There is no rule to say that any assets in the Family Protection Trusts will be excluded.
- Inheritance Tax implications may not have been considered and this will reduce the value of your estate to be left to your beneficiaries
As with any other service you are looking for it is beneficial to shop around and there are advantages to seeking advice from a solicitor given that they are regulated by the Solicitors Regulation Authority and are required to have a complaints procedure.
A solicitor will ensure that you receive advice which is personal to your individual circumstances, including the advantages and also the disadvantages of the Family Protection Trusts so that you can make an informed decision as to whether you wish to go ahead.
From experience, the costs charged by Will writers or similar are far higher than those that would be charged by a solicitor but, you will not have the same protection with those who are unregulated as you would with a solicitor.
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