Are Life Time Trusts worth it?

dunstonh

A local reputable solicitor to us also offers a similar service.  However, when I dug deeper, I found that the will writing etc side is a separate limited company, and the person doing it is not a solicitor or a person with legal qualifications and happens to be the husband of one of the solicitors.      I had a run-in with them several years ago for giving bad information to a client.      Another one locally is also a separate limited company to the solicitor firm.     

So, often these are sub-businesses run by unqualified staff but pay the solicitor firm referral fees.

Albermarle

SLP37 said:

Thank you all for your advice.   I agree we need to consult a specialist in this area.

I am not an expert but I have seen threads on this forum written by stressed estate executors, where distributing the estate and dealing with HMRC has been vastly more complicated, because trusts are involved.

Keep_pedalling

Cus said:

Exodi said:

SLP37 said:

All 3 homes together are worth just over a million pounds.  So it was around protecting family from inheritance tax when we die and avoiding care fees.  In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees therefore any assets in a trust are taken into account. 

Oh great, so what you're basically saying is that you expect everyone else to pay for your care?

"In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees" - not suprising, given that's exactly what you intended to use them for.

Over a million pound in assets, and your master plan is to be dumped in (as @Keep_pedalling says) over my dead body grange.

Maybe there wouldn't be a social care crisis in the UK, if members of the public were not hell bent on making sure somebody else pays for their care.

I don't think you need a word with a solicitor, I think you need a word with yourself.

This whole site is about saving money, and included in that is how to pay less tax.  Why is this so different? The tax that people legally avoid means less for the government to pay for care.

Well hopefully we have saved the OP £3000 on a useless trust that would be subject to the deprivation of assets rules and possible an eye watering tax bill.

There can be downsides to money saving and loosing your ability to choose who and where your care is provided and just as importantly when is totally lost if you have to rely on a LA to provided it. We both want to avoid care homes and if full time care is required our first choice is at home with live in careers and no LA is going to pay for that.

Albermarle

Cus said:

Exodi said:

SLP37 said:

All 3 homes together are worth just over a million pounds.  So it was around protecting family from inheritance tax when we die and avoiding care fees.  In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees therefore any assets in a trust are taken into account. 

Oh great, so what you're basically saying is that you expect everyone else to pay for your care?

"In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees" - not suprising, given that's exactly what you intended to use them for.

Over a million pound in assets, and your master plan is to be dumped in (as @Keep_pedalling says) over my dead body grange.

Maybe there wouldn't be a social care crisis in the UK, if members of the public were not hell bent on making sure somebody else pays for their care.

I don't think you need a word with a solicitor, I think you need a word with yourself.

This whole site is about saving money, and included in that is how to pay less tax.  Why is this so different? The tax that people legally avoid means less for the government to pay for care.

It is a fair point, and something that has been discussed before, I think in one of these threads that go on for ever.
Various strategies to avoid/reduce paying various taxes, and/or getting tax relief are commonplace, and seemingly acceptable. However some are seen as a step too far, by some people.

Deliberately trying to avoid care fees, or IHT, by shifting money into trusts, is one that many see as a grey area. ( although it often does not work)
Another might be deliberately sacrificing salary to get child benefit as a high earner. 
On a different scale many wealthy people, footballers etc get involved in schemes much dodgier.

Exodi

Cus said:

Exodi said:

SLP37 said:

All 3 homes together are worth just over a million pounds.  So it was around protecting family from inheritance tax when we die and avoiding care fees.  In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees therefore any assets in a trust are taken into account. 

Oh great, so what you're basically saying is that you expect everyone else to pay for your care?

"In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees" - not suprising, given that's exactly what you intended to use them for.

Over a million pound in assets, and your master plan is to be dumped in (as @Keep_pedalling says) over my dead body grange.

Maybe there wouldn't be a social care crisis in the UK, if members of the public were not hell bent on making sure somebody else pays for their care.

I don't think you need a word with a solicitor, I think you need a word with yourself.

This whole site is about saving money, and included in that is how to pay less tax.  Why is this so different? The tax that people legally avoid means less for the government to pay for care.

It's important to note that I have only referenced care costs and the OP's comments about deprivations of assets related to care home fees, not inheritance tax. I made no comment on the OP's desire to reduce the tax on their estate, so it's not fair to imply that I did.

But all of that is obviously in stark contrast to finding ways to 'give away' money to avoid paying for your own care. If I made a post saying "I've won the lottery but I quite like receiving benefits, how can I hide the money", I'm sure you'd change your stance and agree that there can be nuance from 'we should help with all requests'. This concept is also self-defeating, given that we are in a social care crisis.

EDIT: sorry I responded before my screen updated with Albermarles response - I think they put my view across perfectly - that some areas are a bit 'grey' (at least in my opinion).

We can also objectively say it's not in the OP's best interests to deliberately deprive themselves, forcing the need for state subsidised care. This would only be to the financial benefit of the beneficiaries of their estate. Personally, I'd be quite upset if my parents were to consider this, as their beneficiary.

Albermarle said:

Cus said:

Exodi said:

SLP37 said:

All 3 homes together are worth just over a million pounds.  So it was around protecting family from inheritance tax when we die and avoiding care fees.  In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees therefore any assets in a trust are taken into account. 

Oh great, so what you're basically saying is that you expect everyone else to pay for your care?

"In my own research I’ve read that councils often see trusts as a deprivation of assets to avoid fees" - not suprising, given that's exactly what you intended to use them for.

Over a million pound in assets, and your master plan is to be dumped in (as @Keep_pedalling says) over my dead body grange.

Maybe there wouldn't be a social care crisis in the UK, if members of the public were not hell bent on making sure somebody else pays for their care.

I don't think you need a word with a solicitor, I think you need a word with yourself.

This whole site is about saving money, and included in that is how to pay less tax.  Why is this so different? The tax that people legally avoid means less for the government to pay for care.

It is a fair point, and something that has been discussed before, I think in one of these threads that go on for ever.
Various strategies to avoid/reduce paying various taxes, and/or getting tax relief are commonplace, and seemingly acceptable. However some are seen as a step too far, by some people.

Deliberately trying to avoid care fees, or IHT, by shifting money into trusts, is one that many see as a grey area. ( although it often does not work)
Another might be deliberately sacrificing salary to get child benefit as a high earner. 
On a different scale many wealthy people, footballers etc get involved in schemes much dodgier.

Malthusian

Cus said:

This whole site is about saving money, and included in that is how to pay less tax.  Why is this so different? The tax that people legally avoid means less for the government to pay for care.

Saving £10 off a weekly shop = saving money
Blowing your pension fund and relying on food banks = not saving money
Mitigating an Inheritance Tax bill by giving unneeded capital to your heirs early enough = saving money
Giving away all your money and having yourself dumped in Overmydeadbody Grove = not saving money, for the same reason that rendering yourself dependent on food banks isn't saving money

From a purely selfish perspective, ignoring the moral argument, the key difference is that saving Inheritance Tax generally does not make your own standard of living any worse. You can in theory slash your outgoings and then give unneeded capital to your heirs, but few people here would advocate it. Estate planning begins and ends with capital you expect to never spend.
Having yourself dumped in Overmydeadbody Grove after giving away / hiding capital would make your own standard of living worse.
Never mind the fact it probably wouldn't work. 

Cus

A lot of good points in response.

@Exodi apologies.  I did read the OP's post as an intention to reduce IHT so that care home fees would also be removed.  

As for saving money, it's an opinion really. I see many examples of saving money to (imo) the detriment of their living standards. 

One could think that they want all their estate to go to their children rather have them or themselves pay for better care.  If done legally, is that wrong?

Someone has to pay.

Linton

Cus said:

A lot of good points in response.

@Exodi apologies.  I did read the OP's post as an intention to reduce IHT so that care home fees would also be removed.  

As for saving money, it's an opinion really. I see many examples of saving money to (imo) the detriment of their living standards. 

One could think that they want all their estate to go to their children rather have them or themselves pay for better care.  If done legally, is that wrong?

Someone has to pay.

It is fair enough to chose to leave money for the children rather than spend it on yourself.  That is rather different to leaving money to the children and expecting other people to pay your living costs.  The council paying for your food and lodgings in old age is not a right but rather a benefit as much as any other state payment for those with insufficient money to support themsleves. Those who try to get benefits whilst actually having sufficient money not to need them are labelled as "benefit Scroungers" by the tabloids.

SLP37

@ExodiThere’s no need to be rude! This time last week I knew very little about trusts.  I was asked by another person in this thread what the will writer had suggested the benefits of a trust would be.  I am just relaying what I have been told by the person we met. I have posted this question to aid my research not to receive abusive comments like this!

I work in social care and they definitely need more money to fund decent services.  I wouldn’t want to, neither do I need to, avoid care fees it was one of the things that was suggested as a potential benefit.  When I need care it will be the best I can afford! 

Exodi

SLP37 said:

I work in social care and they definitely need more money to fund decent services.  I wouldn’t want to, neither do I need to, avoid care fees it was one of the things that was suggested as a potential benefit.  When I need care it will be the best I can afford! 

Great, fantastic to hear