Trust fund to avoid carehome costs?

confused.con

Hi, I was wondering if anyone can answer my query. I can't find anything relevant on the internet that helps!!!

Briefly, my Mum has a rather large estate (cash and property she lives in) and has been advised to place it "in trust" so that she can avoid costly care home charges in the future.

The chap that came to see her was very pushy regards to this trust and has made me highly suspicious. He claims if she puts it into trust she will avoid probate completely and that the government cannot make her pay for her care in the future.
He was less clear on what exactly putting her estate into trust would mean for her, i.e:
Can she access her money should she wish to move house in the future?
Who's to say the government won't close this "loophole" in the future and it will all be for nothing??

To take out this trust he wants to charge her over £3000!

Can anyone help???

bigadaj

If the guy was pushy then don't deL with him. To get this et up properly you would need to speak to a solicitor but this would potentially cost several hundred initially and potentially more than this guys charges for the whole thing. iM no expert but putting your own house in trust is very dodgy, it's like gifting with reservation and probably wouldn't betaken out of the estate.

I personally can't see why individuals can't pay for their own care if they have the means but if you want to proceed with this pay for independent legal advice which won't come cheap.

chris_m

bigadaj wrote: »

I personally can't see why individuals can't pay for their own care if they have the means

I quite agree. My father's just gone into a home and, although I vaguely recollect him thinking about setting something like this up (not sure if he did or not) we've worked out that he can afford it himself so I haven't even looked at whether or not he did.

His various pensions and benefits cover about 75% of the fees so we've only got to find the other 25% - which will either be by selling his house, which should provide for longer than he's likely to live, or possibly renting it out, which should realise pretty close to the remaining 25% on a regular basis.

The other thing to bear in mind with "hiding" assets and relying on local authority funded care is that you may not get as much choice of where it is or how good it is. At least by going self-funding in a private home, we've found a nice one with a good reputation. Although it wasn't his original first choice (still no vacancies there), Dad's reaction after one visit was "please go ahead and get it organised". It's a lovely place with good staff and a good atmosphere - put it this way, I wouldn't object if I had to go in there myself.

atush

I agree, tell her to stear clear of this charlaton.

If she has lots of cash, and wants to pay for her care (but leave something to her family incl you) she should go to an IFA or a solictor adn set something up via an investment of X pounds that would pay out monthly should she go into a home.

"avoiding" fees, liek avoiding taxes can be dodgy. And in any case, should she need are and rely in the state, she might end up in a pretty awful place. Better to use her money to insure she can get into, and stay in, a Good home should she need one.

If right now, she doesn't need care, nor has any resonable expectation of doing so, she can make gifts to you and others that would be exempt from tax should she live another 7 years. As it would not count as deprivation of assets then. And if her estate will be large due to the death of your father, then she has 2x the nil rate band to bequeth before taxes.

BobQ

confused.con wrote: »

Hi, I was wondering if anyone can answer my query. I can't find anything relevant on the internet that helps!!!

Briefly, my Mum has a rather large estate (cash and property she lives in) and has been advised to place it "in trust" so that she can avoid costly care home charges in the future.

The chap that came to see her was very pushy regards to this trust and has made me highly suspicious. He claims if she puts it into trust she will avoid probate completely and that the government cannot make her pay for her care in the future.
He was less clear on what exactly putting her estate into trust would mean for her, i.e:
Can she access her money should she wish to move house in the future?
Who's to say the government won't close this "loophole" in the future and it will all be for nothing??

To take out this trust he wants to charge her over £3000!

Can anyone help???

Agree this guy is best to steer well clear of.

Aside from the morality of not funding her own care, the advice given might be sensible in relation to protecting her assets but could have other consequences. You can probably set a trust up for less than £3000 by going to a specialist solicitor, but your mother needs to understand the implications. Who would be the trustees? If they were professionals they will want to be paid from the trust. Does she trust them to execute her wishes?

She would certainly be giving her assets to trustees to spend as the trustees choose in accordance with the trust document that sets it up and would lose control over her assets. So it would be important that the trustees were given directions or guidance on what they should and should not do with the assets. Unless they are allowed a lot of discretion, they would probably not be able to deal with all possible circumstances in the future.

Probably better to gift money she does not need and keep the assets in her control for her benefit

dunstonh

Briefly, my Mum has a rather large estate (cash and property she lives in) and has been advised to place it "in trust" so that she can avoid costly care home charges in the future.

You are not allowed to recommend that. Whilst there are certain investment tax wrappers and trusts that can avoid local authority care means test, they have to be by accident rather than design. The minute it is documented or shown that the reason for doing it was to avoid the means test then it falls foul or deprivation of assets and can be brought back into the means test.

You don't actually need a trust to do this. If the investment bond tax wrapper is suitable in its own right then the investment bond would not be included in the means test. As for the trust, she would need a genuine reason for setting up the trust. Has that been said what it is?

somethingcorporate

Why do you think she should avoid having to pay for this? Especially when it sounds like she has significant means.

Fortunately the Local Authorities have a lot of power with regard to seeing through things like this and will fortunately treat her as if she still has the asset.

xylophone

http://webarchive.nationalarchives.gov.uk/+/www.direct.gov.uk/en/CaringForSomeone/CareHomes/DG_10031523 Note "Trying to avoid care home fee payments
Sometimes people deliberately transfer ownership of their assets to someone else in order to reduce what they pay in care home fees. If the local council believes this has happened they may assess you differently than in the normal assessment procedure:
if assets were transferred within the six months before you moved into care, the council can recover the cost of your stay from whoever received the gift
if the transfer happened more than six months before you moved into care, they can assess you as if you still own the assets
There's no time limit on how far back the council can look to find out if you gave away assets to avoid care costs".

The keynote here is intention - if a trust were set up for IHT planning say, then deprivation of assets to avoid care home fees was not the primary intention. But.......as above.


Never get involved in setting up a Trust without obtaining expert advice from a solicitor expert in wills and trusts.

Look for one with full membership of the Society of Trust and Estate Practitioners. http://www.step.org/system_pages/call_to_action_navigation/search_for_a_step_member.aspx?link=link

http://www.hmrc.gov.uk/trusts/types/index.htm

Mojisola

confused.con wrote: »

Briefly, my Mum has a rather large estate (cash and property she lives in) and has been advised to place it "in trust" so that she can avoid costly care home charges in the future.

Take your Mum out for a few visits of the care homes where she could choose to live if she is self-funding and then a few of the ones that the council will pay for.

Also keep in mind that, as costs of residential care rises and council budgets are cut, the council will do everything they can to keep people in their own homes. If all they will offer is 3 x 30mins visits a day from carers, your Mum could spend a lot of time in isolation without help. Wouldn't she rather have access to her own money to have a comfortable last few years?

YesWillMan

It could be a Lifetime Family Trust that the guy is trying to sell you

With a Lifetime Family Trust you can protect all of your major assets (not just your house) during your lifetime. The trust operates straight away, unlike a Will which has to wait until you die before the protection can apply. The trust includes you as a beneficiary and you can remain in control of the trust. Trust assets are protected against all sorts of possible attacks in your lifetime and can be managed for your benefit even if you lose mental capacity (without the need for a Lasting Power of Attorney). When eventually you pass away the assets can then go to your family quickly without the costs and delays of Probate, but with protection for future generations that can continue for up to 125 years! It is a very powerful solution.

They are specialist Trusts that start straight away not on death and are usually sold by IPW members but usually there are good reasons for being taken up.
However I am not saying that the guy is certainly IPW cos there others around selling these who are not such members so do not abide by their rules and abide by their ethics. If he is he should have clearly indicated this at the outset with IPW information somewhere on his stationery and/or business card