Trust or Power of attorney

shuggler

Hello,

Advice please on what would be the best plan to safeguard our assets for our family, so that they can benefit from what we have when the time comes. Based in Scotland.
Many thanks

elsien

Can you please be a little bit clearer about what you think you need to safeguard the assets from, and when what time comes?
I can guess, but I don’t want to presume.

Trust and power-of-attorney are completely different things with different purposes. It’s not an either/or, whatever it is you are trying to do.

shuggler

Basically want to protect my home and any savings from being used for care home costs etc, if it ever comes to this. Had been talking to some friends and some have suggested Power of Attorney and others recommend a Trust would be a better option.
Not done anything like this before so looking for the best and right plan of what would be the best thing to do, or if there are other options available that would be better than what's  been suggested.

elsien

You should have a power of attorney in place anyway, to cover both finances and health and welfare regardless of what assets you may or may not be leaving behind.

The purpose of a power of attorney is to make decisions in your best interests if you can no longer do so for yourself.  If you lose capacity without this being in place then no-one can legally access your bank accounts or pensions without applying to act on your behalf - I don't know about Scotland but in England this has been taking 12 - 18months leaving people with no money for substantial periods of time.

Without the health and welfare side of things you will be reliant on professionals rather than the people who know you best to make decisions for you, such as where you live and what medical treatment you do or don't have.
A power of attorney can't be hiding your money away to prevent it being used for care - there is no valid argument that stopping you having access to your money in order to make sure someone else gets it further down the line is in your  best interests and a power of attorney could be ended if whoever is acting for you tries to do this.
But it does have very clear benefits for other reasons, as above. 

I don't have enough knowledge of Scottish law to comment on the trust situation. What I would say is that in England there are any number of unscrupulous firms promising to achieve what you are trying to do, they tend not to work and they have unintended consequences that tend to come back and bite people on the backside further down the line. 
If it is something you want to explore, be very careful who you speak to about it, and also any ramifications for both you and your family.

And my usual twopennorth - why should you expect other people to pay for your care just so your relatives can benefit.
Money gives choices. Don't underestimate the importance of that - it could make the difference between a care home that works for you and one that barely meets your needs and gives you little in the way of quality of life.

bunnygo

if you need care, it has to be paid for somehow. You'll get much better care and choices if you pay for it yourself.

you should set up powers of attorney with people you trust to use your money in YOUR best interests.

shuggler

Thanks for your comments much appreciated, 

(Elsien) Regards expecting other people to pay for my care, at 72 i worked and paid into the system all through my working years, and still paying, I think I have more than paid my fair share for my care, and I think trying to use what I have to improve my siblings life is the right thing to do. But I take on board what you say, as who to speak to which is why I came here to ask, but from what you say it looks like there is no way to avoid paying care home fees, so I will need to think of other plans, 

Many thanks.

(Bunnygo)  Thank you, hopefully I won't need to go into care fingers x.

RAS

You also need to consider:

The vast majority of people do not need to go into care homes
Spending some of your hard earned money on support in the home may enable you to live there happily and safely, rather than ending up as an emergency admission after a health crisis and a fall.

Savvy_Sue

Actually, very few people as a % of the population need residential care at the end of their lives. Having money available gives you choices, and making good ones can reduce the risk: future proofing your current home or moving somewhere well suited to any limitations; paying for cleaners, gardeners and odd jobs to keep your home safe and comfortable; making adaptations etc.

By all means leave what's left over to your nearest and dearest, but quality of end of life matters.

I also have a feeling that care home costs are dealt with differently in Scotland, so do check what the actual situation might be for you, I think it's more favourable than for us southerners.

pollypenny

shuggler said:

Thanks for your comments much appreciated, 

(Elsien) Regards expecting other people to pay for my care, at 72 i worked and paid into the system all through my working years, and still paying, I think I have more than paid my fair share for my care, and I think trying to use what I have to improve my siblings life is the right thing to do. But I take on board what you say, as who to speak to which is why I came here to ask, but from what you say it looks like there is no way to avoid paying care home fees, so I will need to think of other plans, 

Many thanks.

(Bunnygo)  Thank you, hopefully I won't need to go into care fingers x.

Most of us pay 'into the system' all our lives and most with occupational pensions still do.  I am trying to ensure that OH and I have sufficient funds to cover any care we may need in the future. We take responsibility for ourselves. 

The 'right thing to do' is not expect other tax payers to pay for your care and your siblings' inheritance. 

gm0

Deliberate deprivation of assets rules.  Google

Having paid in is irrelevant.  We all pay in - in various ways.  And yet somehow the amount the services provided cost exceeds that by a large margin.  And the care system is what it is in England and the devolved variations.

Periodic tax charges on trusts make many historic avoidance ideas - less attractive now.  Certainly for UK tax domiciled.

But well in advance of potential need - without anticipation of care needs at the time (no diagnosis). 
You can simply gift to Battersea Dogs Home, siblings. heirs.  Apply 7 year taper for IHT exemption (Potentially Exempt Transfer).  Don't die too soon.

Do the same thing 3 weeks before entering a care home - then expect there is a possibility for the LA to come knocking when a financial true up is done.  Basically to seek recovery of the assets for self funding and to treat you meanwhile as though the last minute gifted assets still exist.  i.e. You pay your way.  A problem of your own making.

The rules already allow you to support family (gifting).  What they don't allow is to hoard the assets and retain control of them as yours. And then also exempt them from funding your own care (or indeed accessing other means tested benefits where - correctly - you fail a means test as designed by having savings).  If you would like more universal benefits - do vote for them - and accept the wealth, income, consumption and inheritance tax consequences of your wishlist.

That's the deal in England until somebody grasps the nettle to socialise long stay social care into general taxation via a contribution cap or otherwise.

Reasonable people disagree on the extent to which this should be socialised more than it is already and how that should be funded if so. Many £bn so not a trivial consideration.