Asset Protection Plans

jimip

My parents have told me they are looking into an Asset Protection Plan which is to cost approx. £4500 to set up.

Wondering if anyone can offer some advice on these please? Are they a good or bad thing? Are there any pit falls? Does it make life easier for those left behind?

Any advice appreciated.

madbadrob

Never heard of them
Rob

madbadrob

Found this though http://www.telegraph.co.uk/finance/personalfinance/insurance/longtermcare/10117822/Warning-over-care-home-trust-schemes-that-promise-to-protect-your-property.html

WOuld say reading that they aren't worth it

Rob

jimip

Thanks for your response.

I've had a read of the Guardian article. It gives the idea that even if you have one of these plans set up it's no guarantee property and assets would not be included.

My concern is the amount being asked up front for this service. It appears my parents have been 'sold' on the 'peace of mind for those left behind' idea.

My parents committed to a funeral plan several years ago with the same company who are now offering this add-on service.

Is there any where I can get more advice on the cost of going through the usual procedures upon death of parents so I can hopefully give them a balance view of costs ?

madbadrob

The only thing I can suggest is to speak to a solicitor/financial adviser. There are a lot of these going around at the and lots are failing

Rob

troubleinparadise

Do your parents have many assets and a very large estate which may attract inheritance tax? In which case for much less they could have professional legal, accounting or financial advice which would be better value.

Are they over 60?

If the idea is to protect their assets from being used to pay for care home fees, they may be throwing their money away as there may never be any need to sell a property, or even fund their own care.

I suspect these plans are exploiting people's fears and lack of knowledge - better to read up on the rules as they stand, and make an informed decision according to their personal circumstances afterwards.

jimip

Again thanks for the responses.

Both parents are mid 80's and in good health. Their assets include their bungalow, car and savings. Nothing exceptional.

Managed to speak to the person 'selling' the plan today and he certainly promoted the benefit of putting the assets in the trust to protect from care home fees.

Have asked my parents to consider speaking to a solicitor to get advice before they commit.

I'm certainly coming down on the side of them not taking the plan on the off chance they need a care home.

Mojisola

jimip wrote: »

Both parents are mid 80's and in good health. Their assets include their bungalow, car and savings. Nothing exceptional.

Managed to speak to the person 'selling' the plan today and he certainly promoted the benefit of putting the assets in the trust to protect from care home fees.

Have asked my parents to consider speaking to a solicitor to get advice before they commit.

I'm certainly coming down on the side of them not taking the plan on the off chance they need a care home.

Well, he would when the company stands to gain £4,500 for arranging it!

If your parents arrange the ownership of their home as "tenants in common" and own the property 50/50 then each can leave their half of the house to their children. After the first one dies, the survivor then only owns half the house. The will should give the survivor life-time use of the property and the ability to downsize if necessary.

If the survivor does then need residential care, they will have a lump sum of half the value of the house so that they will be able to choose their care home, rather than go into the cheapest one available that the LA will pay for.

Take into account that most people don't end up in residential care and, of those who do, the average stay until death is about two years.

troubleinparadise

Read this link for an overview of how a property might be disregarded when it comes to a financial assessment for care home fees (Page 6) as one example:

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS38_Treatment_of_property_in_the_means-test_for_permanent_care_home_provision_fcs.pdf?dtrk=true

And further useful info.

madbadrob

troubleinparadise wrote: »

Read this link for an overview of how a property might be disregarded when it comes to a financial assessment for care home fees (Page 6) as one example:

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS38_Treatment_of_property_in_the_means-test_for_permanent_care_home_provision_fcs.pdf?dtrk=true

And further useful info.

REading the above link it would seem that if only one of your parents needed long term care then the value of the house would not come into play in your circumstances so I would not be paying 4.5k to anyone to set up a trust that in all liklihood would be declared invalid should they both go into care.

If they wanted to do this though I am positive a solicitor would draw something up for a lot less than the figure quoted.

Out of interest what company is this and did they cold call your parents

Rob

MrsMouth

£4,500 does sound like a lot for this kind of work. I am aware of a number of companies selling this kind of product but they guarantee that they will work (so that's what you pay your money for). I am aware that the strategies are sometimes challenged at the point that someone goes into care. In the case of one company I know that does this kind of work and charges this kind of price, it includes any work the company do on your behalf to defend the strategy (so dealing with LAs to challenge the valuation of the house etc).

To date, I haven't seen them lose a case. Money well spent?

I am aware of companies that would charge in the region of £2,000 for this kind of work and that would include a money back guaranteee - if the planning doesn't work, you're in no worse of a situation anyway because you get back what you paid for the planning.

None of us know whether we will end up in care but I know lots of families that have been left heartbroken when they realise what it's going to cost, and no planning has been done.

A Trust is a safer way for a family to put in place this kind of protection over giving a half share of a property to a child or children - this results in later CGT liabilities and problems if the children divorce, pass away or go bankrupt in the meantime.