The Family Home Protection Trust

cumb2000pitt2001

Good Morning, can you help please?

I have been advised to put my property into a  Family Home Protection Trust. I have been quoted £4,500 - £5,000

My mortgage was in my name only and I cleared it 18 months ago.  The property will be left to my three adult children only, Can you please advise me as to if this is a good idea and if its a totally safe option.

Thank You

(Removed by Forum Team)

xylophone

What is your reason for doing this?

https://www.oraclelaw.com/the-problem-with-family-protection-trusts/#:~:text=One of the most common,challenge the trust in court.

Problems with Family Protection Trusts

One of the most common issues with Family Protection Trusts, is the deprivation of assets. If a council believes that a trust has been set up to avoid care home costs, it can challenge the trust in court. If the council is successful, the trust is ineffective and the costs of setting up and running the trust plus the court costs are all wasted.

tacpot12

Why do you want to do this?

Do you have any care needs are present and do you think you will need to go into a carehome in the future?

Are you happy to rely on your local authority to provide you with a place in any carehome, rather than having the option to sell your home so you can pay for the carehome you want?

eskbanker

The benefits and safety of doing this should be explained to you by any solicitor you're considering engaging to handle the job, based on a full understanding of all relevant circumstances, but there are generic pros and cons listed at sites like:

https://pathslawfirm.com/wills-trusts-powers-of-attorney/family-protection-trust/

Edit: as pointed out below, link isn't relevant

dunstonh

I have been advised to put my property into a  Family Home Protection Trust. I have been quoted £4,500 - £5,000

Most of these I have come across have been a complete waste of money and only exist to enrich the salesperson.  Many do not achieve the goals they were sold on.    Trusts are incredibly complex, yet you get unqualified people who have done little more than read a manual over a weekend who are now selling them.  If you are going to do it, then use a solicitor for advice on the trust.  Not a low-qualified, unregulated will writer trying to hit sales targets with bolt-ons.

The main issues are:

• deprivation of assets (if there is no other justification for doing the transaction, it may not avoid the means test)
• reduced IHT allowance (this can depend on the style of trust) - the property element of the IHT allowance can be lost.
• HMRC reporting
• If you want to unwind the trust, it can be costly

Keep_pedalling

The only reason have been advised to do this because the salesman who advised you to do so is going to earn a nice fat fee for creating a useless trust that is likely to cause nothing but trouble, do not touch this with a very long bargepole. 

UncleK

eskbanker said:

The benefits and safety of doing this should be explained to you by any solicitor you're considering engaging to handle the job, based on a full understanding of all relevant circumstances, but there are generic pros and cons listed at sites like:

https://pathslawfirm.com/wills-trusts-powers-of-attorney/family-protection-trust/

Surely this is based on US law so some bits may not apply or might be different?

poseidon1

UncleK said:

eskbanker said:

The benefits and safety of doing this should be explained to you by any solicitor you're considering engaging to handle the job, based on a full understanding of all relevant circumstances, but there are generic pros and cons listed at sites like:

https://pathslawfirm.com/wills-trusts-powers-of-attorney/family-protection-trust/

Surely this is based on US law so some bits may not apply or might be different?

Definitely, do not want to be taking tips and hints about UK family Protection Trusts from a law firm based in Missouri USA - the dangers of wandering unguided  around the internet!

UncleK

A quick Google on uk sites just brings up this mob - who are definitely touting this as a way to avoid means testing. They say "This safeguards them from care authority means testing, but it must be done sooner rather than later; this may be seen as “deliberate deprivation” if done too late." Ho hum.
So I think the terminology Family Home Protection Trust is just used by these people and no doubt there are other terms, like Estate Protection Trust but all the comments made by fellow forumites remain applicable. So watch out - the trust may indeed be useless for you, but useful for the people who sell it to you.

masonic

Even if technically legal today, future clampdowns on benefit fraud could change that when the 'protection' is needed, by which time the firms pushing these schemes will have ridden off into the sunset with your money.

There is also no guarantee that taxpayers will fund a quality of care you may wish to have later in life should you need it, and it would be a test on your relationship with your children if you needed them to fund it.

UncleK

Indeed, with aging population and subsequent rising costs of care, this is an area that is up for grabs. Theresa May tried it on and didn't get anywhere but the issue isn't going away, whatever people may think of the rights and wrongs.