Asset Protection

The Facts

Every five minutes someone is forced to sell their home to pay for their care.

The Facts

Your property is vulnerable to Local Authority Assessment

Residential Care Fees are typically £2,500 to £5,000 per month

Care in your own home is also assessable

The Facts

Assets/Income at Risk

• Capital assets in excess of £13,500 per individual are subject to assessment.

• Income exceeding £21.15 per week may be taken by the local authority towards your care fees.

• Community Care Act 1990

• Health & Social Care Act 2001

• Deliberate Deprivation of Assets

• Cannot transfer assets into children's name

The Rules

The Declaration

I am aware that if I dispose of, or have disposed of any of my capital assets, property or investments the County Council may take account of those resources as if they were still mine and charge accordingly.

I also understand that the County Council reserves the right to reassess and backdate charges should any undeclared assets be discovered

The Solution

Protect your property with anAsset Protection Trust so that only you

and your beneficiaries have access.

The Solution

• You remain in control at all times and you are free to move, sell, downsize or reverse at any time.

• Property held in the trust can bypass probate and is not subject to claims on your estate.

• Properties below IHT Threshold (£312,000 per owner 08/09) in to an Asset Protection Trust• Cash / investments exceeding £13,500 to a Life Assurance Investment Bond which is not assessed for capital or income purposes but allows you accessibility to income and capital at all times

LifeAssurance

Bond

+

Recommendation

Bank Account

£13,500 max.

A Life Assurance Bond is not assessable forlong-term care fees if established correctly

ExampleMr & Mrs Brown

House - £200,000

Savings - £ 50,000

Total - £250,000

No IHT Payable but......

£236,500 Vulnerable to Local Authority Assessment.

£250,000 estate protected from care feeswithin the Trust and Life Assurance Bond

Mr & Mrs Brown

LifeAssurance

Bond

+

Bank Account

£13,500 max.

The trust is established by severing the joint ownership and creating “Tenants in Common”

so that each of you now owns 50% of your home

You must always derive a benefit from your Trust and this requirement is satisfied when you live in

your home

If you go into long-term care then you must still derive a benefit from the Trust and this is again

satisfied if your partner remains in the house

On the demise of the first party their share of the home should be placed in a will trust for beneficiaries with a

life interest to the surviving spouse.

Life Interest

ChildrenGrandchildrenFuture issues

Will Trust

Life Interest


Will Trust

These trust assets are then not part of the surviving spouse’s estate but he/she still has full use of the assets and they continue

to be protected from means testing for care fees.

Life Interest


Will Trust

This trust affords your beneficiaries protection from sideways disinheritance due to a remarriage and protects your beneficiaries from future divorced partners/creditors. The Trust can also provide

considerable IHT savings for grandchildren.

Life Interest


Will Trust

Rental Income LocalAuthority

If you then go into care and there is no partner at home you must continue to benefit from the Trust and so you must either rent out the house - the capital value remains protected but not

the rental income which the local authority may claim…

Life Interest


Will Trust

…or sell the house - the capital value remains protected but the investment interest may be claimed by the local authority

Interest LocalAuthority


Will Trust

On the second death the surviving partner’s property shouldbe paid into a Will Trust in the same way as the first partners

Will Trust



Will Trust

Benefits ofDiscretionary Will Trusts

• Ensures benefit through blood line.• Protects your beneficiaries from estranged partners.• Protects your beneficiaries from creditors.• Protects your beneficiaries from loss of means tested state benefits.• Provides IHT savings for grandchildren.

Will Trust


John leaves his house share valued at £150k ina Will Trust, after his wife’s death, to his threechildren. Paul, Simon & Jane.

• Paul has marriage problems... and is going through a divorce.

• Simon has money problems... and is going through a bankruptcy

• Jane has health problems... and is in receipt of State benefits

Example

By leaving his estate for his family in a Will that incorporates a Discretionary Trust...

• ...Paul’s wife has no claim on the inheritance.

• ...Simon’s creditors have no claim on the inheritance.

• ...Jane can continue to receive state support and use the inheritance for extras – holidays etc.

Will Trust Planning

PROTECTEDLife

AssuranceBond

+

Bank Account

£13,500 max.

Costs – vat inclusive

Asset Protection Trust £2,000Will Trust £ 495

+ ChildrenGrandchildrenFuture issues

Will Trust

Economy & Finance

Asset Protection