Home Protection Trust, will it be a costly mistake?

oliveoil54

tooldle said:

Another perspective for you. How easy will it be to dissolve the trust upon your death? I have a friend whose parent did the same as you, specifically as he wanted others to pay for his care and for his money to pass to his kids. More than 18months have now passed since his death and the trust still exists, despite the involvement of the original company and now a new solicitor. Charges are racking up both for legal fees and to maintain / keep an eye on the property. The stress the situation has caused my friend is considerable.
Think long and hard. 

Totally agree it’s turning into a mine field, far too many issues that I’m stupidly only now just discovering. So think it’s going to be an expensive £1,600 learning lesson.
My advice to all people considering this option is to research the small print & if you don’t understand it clearly find someone who can explain it to you simply, not quote jargon & abbreviations!  Though truth be told as I understand on my death the property is then free to them to sell less the IHT (no nil rate band allowed) & payment of any CGT on any increase in value from when the Trust was taken out! Which my children have to find before they can actually sell the house.

Keep_pedalling

When you bought the house with your husband 4 years ago did you purchase it as tenants in common or joint tenants?

If the former then you have the option for compromise solution. A deed of variation leaving his share of the home to his children with you getting a life interest. This not only protects their legacy from their father but avoids the tax issues associated with the plan you are about to (quite rightly) rip up and maintains your long term security, including being able to fund the care of your choice if needed. 

You don’t say how much your home is worth but from what you say about the tax issue it is obviously significantly over £325k so the risk of more than 50% of it going on care costs is quite small so taking any action at all is probably unnecessary, especially if you also have a reasonable retirement income.

[Deleted User]

Why are people so obsessed with leaving an inheritance? You brought your children up and looked after them as well as helping them along the way. People have to make their own way in life.
Your life is also for living and enjoying. I have made it clear to my family that anything I leave them is a bonus rather than a given.

oliveoil54

Keep_pedalling said:

When you bought the house with your husband 4 years ago did you purchase it as tenants in common or joint tenants?

If the former then you have the option for compromise solution. A deed of variation leaving his share of the home to his children with you getting a life interest. This not only protects their legacy from their father but avoids the tax issues associated with the plan you are about to (quite rightly) rip up and maintains your long term security, including being able to fund the care of your choice if needed. 

You don’t say how much your home is worth but from what you say about the tax issue it is obviously significantly over £325k so the risk of more than 50% of it going on care costs is quite small so taking any action at all is probably unnecessary, especially if you also have a reasonable retirement income.

No it’s probably just on the mark at just over £300,000. However I presumed that I would be able to use late husband’s share of the nil rate band for IHT taking me to approx £600,000 allowance, as you are allowed to add the unused part of the spouse’s estate to yours. Which would have been ample! However this Trust doesn’t not allow the house to be considered as nil rate band, the way I read it, it means the whole of the house falls into the IHT bracket immediately!
When we moved from Scotland the local Solicitor suggested with husband’s consent (he had full cognition at the time) in 2018 that the house be transferred into my Sole name. So I owned the property from that date. Unfortunately if I do require long term care than than I would expect to pay approx £42,000 per annum.

PennyForThem_2

Is the house your only asset?  Do you have any savings?

You could look at this which may protect you if you need to go into care:
https://www.unbiased.co.uk/life/pensions-retirement/what-is-an-immediate-needs-annuity-how-does-it-work

If you live in England why are you worrying?
https://www.which.co.uk/news/article/social-care-reform-whats-changing-and-how-will-it-affect-you-atJJX5g9ohbV

ccluedo

PennyForThem_2 

If you live in England why are you worrying?
https://www.which.co.uk/news/article/social-care-reform-whats-changing-and-how-will-it-affect-you-atJJX5g9ohbV

Remember this cap may only apply to the  Personal Care element.  What is sometimes referred to  hotel services (food,accommodation etc) may still be charged with no cap and could soon rack up.

PennyForThem_2

But wouldn't pension cover this?  Umm, maybe not if minimal.  So the criticism leveled at the government is that this 'solution' favours the rich.....again.