Estate planning

downhillian

My wife and I are updating our will to include our three children as the new administrators. It has been suggested that we create a trust so that on first death half of the estate is ring fenced for care costs etc. Because this is not done prior to death it cannot be classed as asset deprivation by councils. The cost for setting up the trust is £550. Does anyone have any relevent experience of this?

Keep_pedalling

It sounds like you are using a will writing company who like to upsell stuff like this. 

It is quite correct that putting your estate in trust would not be classified as as deprivation of assets, but you have to consider the potential downsides of doing this. The first of these is do you actually want to risk relying on a LA to fund your care in what could be an over my dead body grange type care home?

Another biggy is lumbering your trustees with the burden of managing the trust. This is fairly simple if we are talking about putting your share of your home into an immediate post-death interest trust (IPDIT) and it should not add £550 to the cost of your will,  but if you are putting your liquid assets in it as well then it is a different story as the trustees are going to need to be very hands on and have to make annual tax returns for the trust.

If you have sufficient assets to meet any likely care costs without having to rely on inheriting from your spouse, this is a total waste of time although if you are relatively young an IPDIT can also be used to protect your children’s inheritance where a surviving spouse remarried.

IanManc

Keep_pedalling said:

It is quite correct that putting your estate in trust would not be classified as as deprivation of assets ....

No it isn't "quite correct".

"If your local authority suspects that you have put your home or savings into a trust in order to avoid paying care fees then they will challenge you. Transferring assets into a trust primarily to avoid care fees can be determined to be a ‘deprivation of assets’."

https://advisingfamilies.org/uk/information-portal/planning-ahead/trusts-care-fees/#:~:text=What is 'deprivation of assets,a 'deprivation of assets'.

Don't do this. It doesn't work.

Find a solicitor - not a will writing company - who specialises in wills, trusts and probate to give you some proper advice. 

I think you are getting your priorities wrong.

Most people don't go into care homes. If you or you wife end up being one of the minority who do, then will you want to go into somewhere of your choice which is clean, comfortable and homely, or will you be happy to go into, or have your wife carted off to, a place which is dingy and where the smell of urine hits you as you as you walk in?

This money belongs to you and your wife. Your priority should be the comfort and security of your wife and yourself.

If the local council regards this wheeze as a deprivation of assets, which it clearly is because that's the only reason you've given for doing it, they will either refuse to fund your care or they'll put a charge on your property to recover all the costs of it, which will get first call on the proceeds of its sale.

Honestly, if it was that easy to get round the deprivation of assets legislation in this way then qualified and experienced probate wills and trusts solicitors would advise everyone to do it, but they don't.

In fact they advise everyone not to do it.

Go back to the drawingboard, think about your real priorities and what the money should actually be used for if it was needed, and find someone else to do your will.

Keep_pedalling

IanManc said:

Keep_pedalling said:

It is quite correct that putting your estate in trust would not be classified as as deprivation of assets ....

No it isn't "quite correct".

"If your local authority suspects that you have put your home or savings into a trust in order to avoid paying care fees then they will challenge you. Transferring assets into a trust primarily to avoid care fees can be determined to be a ‘deprivation of assets’."

https://advisingfamilies.org/uk/information-portal/planning-ahead/trusts-care-fees/#:~:text=What is 'deprivation of assets,a 'deprivation of assets'.

Don't do this. It doesn't work.

Find a solicitor - not a will writing company - who specialises in wills, trusts and probate to give you some proper advice. 

I think you are getting your priorities wrong.

Most people don't go into care homes. If you or you wife end up being one of the minority who do, then will you want to go into somewhere of your choice which is clean, comfortable and homely, or will you be happy to go into, or have your wife carted off to, a place which is dingy and where the smell of urine hits you as you as you walk in?

This money belongs to you and your wife. Your priority should be the comfort and security of your wife and yourself.

If the local council regards this wheeze as a deprivation of assets, which it clearly is because that's the only reason you've given for doing it, they will either refuse to fund your care or they'll put a charge on your property to recover all the costs of it, which will get first call on the proceeds of its sale.

Honestly, if it was that easy to get round the deprivation of assets legislation in this way then qualified and experienced probate wills and trusts solicitors would advise everyone to do it, but they don't.

In fact they advise everyone not to do it.

Go back to the drawingboard, think about your real priorities and what the money should actually be used for if it was needed, and find someone else to do your will.

Sorry my wording was a bit off there, I should have said leaving your estate to a trust is not deprivation of assets. 

EthicsGradient

downhillian said:

My wife and I are updating our will to include our three children as the new administrators. It has been suggested that we create a trust so that on first death half of the estate is ring fenced for care costs etc. Because this is not done prior to death it cannot be classed as asset deprivation by councils. The cost for setting up the trust is £550. Does anyone have any relevent experience of this?

I would add that my 2 brothers and I found it very hard to find a bank willing to open an account in the name of 3 private executors (HSBC were the only one at the time, over 10 years ago, and I don't know if they'd be willing to do it now). It might be worth checking with your bank(s) now if they'd do that, and, if not, consider cutting it down to 2 - or tell them that it might be wiser for one of them to step down at the time.

Albermarle

EthicsGradient said:

downhillian said:

My wife and I are updating our will to include our three children as the new administrators. It has been suggested that we create a trust so that on first death half of the estate is ring fenced for care costs etc. Because this is not done prior to death it cannot be classed as asset deprivation by councils. The cost for setting up the trust is £550. Does anyone have any relevent experience of this?

I would add that my 2 brothers and I found it very hard to find a bank willing to open an account in the name of 3 private executors (HSBC were the only one at the time, over 10 years ago, and I don't know if they'd be willing to do it now). It might be worth checking with your bank(s) now if they'd do that, and, if not, consider cutting it down to 2 - or tell them that it might be wiser for one of them to step down at the time.

In addition from my small experience it is better to appoint as executor, not only someone you trust, but someone who is reasonably savvy with money, good at dealing with people/institutions, pragmatic, sensible etc .
Usually in a family/offspring, some will fit this bill better than others.

downhillian

Thank you for your comments although I don't think we're any further forward. It's not a will-writing outfit that suggested this, its the Co-op Legal services. They tell me that it would definitely not be classed as deprivation of assets. We had planned to have our three children plus the Co-op as administrators

dunstonh

 It's not a will-writing outfit that suggested this, its the Co-op Legal services. They tell me that it would definitely not be classed as deprivation of assets. 

It certainly is if this the reason it is being done for.   For it to be exempt, there has to be a justifiable reason for doing i that has nothing to do with the local authority means test.

We had planned to have our three children plus the Co-op as administrators

You mean trustees?
If so, have you explained to them the duties of trustees?

Albermarle

 We had planned to have our three children plus the Co-op as administrators

Do you mean executors ( of your estate) ?

Keep_pedalling

downhillian said:

Thank you for your comments although I don't think we're any further forward. It's not a will-writing outfit that suggested this, its the Co-op Legal services. They tell me that it would definitely not be classed as deprivation of assets. We had planned to have our three children plus the Co-op as administrators

I would not rate the Co-op legal service any higher than most will writing companies and would always recommend using a local solicitor who is not likely to be pushing care avoidance trusts. Frankly the only people who benefit from such schemes are the salesmen earning their fat fees and your beneficiaries who may end up inheriting more at the expense of you receiving inferior care. 

With three adult children you don’t need to add professions executors for your will although they might need help if you insist on going ahead with complex trusts. You might also like to look at the new rules that are coming in October regarding c are cost reform which may reduce your concerns  in this area. 

https://www.gov.uk/government/publications/build-back-better-our-plan-for-health-and-social-care/adult-social-care-charging-reform-further-details#:~:text=On%207%20September%202021%2C%20government,for%20local%20authority%20financial%20support.

LHW99

If you add a professional executor, but you children decide they don't want to use them, or there is some other problem (Co-op going bust?) there may be difficulties.

Relatives had named their local solicitor, who had retired and closed his company by the time the wills had to be dealt with. Luckily we were able to a) locate the named person and b) persuade him to relinquish the duty, but it took extra time / effort.

If you only name your children, they always have the option of bringing in a professional if they feel unable to cope at that stage.