Asset Protection Living Trust

Bookworm41

I'm looking for some advice on Asset Protection Living Trusts. I've spoken to a representative from Honey Legal about setting this up as our mortgage is now paid off and wanted to make sure we have looked into everything estate planning wise (have a will and LPA). I want to do as much due diligence as possible before speaking to them again.

In terms of Honey Legal they are regulated by the Solicitors Regulation Authority (SRA) and they are rated as 4.9 on Trust Pilot, I have read a lot of the reviews on there. I've asked a few questions since we last spoke and they have provided the answers. But I am looking for advice on trusts and whether it is a good idea as they make it sound too good to be true, yet there are a lot of news articles etc which have horror stories about them for the beneficiaries down the line and them being mis sold by funeral directors, building societies and others.

I also know someone whose Mum set up a trust like this which included her property and it worked perfectly for them. Older family members have also done this but after their deaths it turned out not to be what they had thought, so I want to make sure I find out as much as possible.

Has anyone set up this type of trust for their estate? Any advice, good and bad welcome.

Thanks.

Worried_fool

Many people have done this, and later discovered what a terrible idea it was.

As a rule of thumb, if you set up a trust in order to be exempt from tax or care-home fees that you would otherwise have to pay, the trust is legally invalid and you are treated as if it did not exist. It is only if you have some good reason for setting up the trust that it also provides tax benefits.

I suggest that you pay a proper solicitor for an appointment to discuss your situation. Any advice that you are given from someone who does not charge for her/his time will be sales talk, and not reliable.Note that if you are not paying for the salesperson's time, the cost will be paid by your heirs: probably at an inflated rate.

flaneurs_lobster

This Honey Legal?

https://forums.moneysavingexpert.com/discussion/6586504/will-p-o-a-s-and-honey-legal

Albermarle

The main beneficiaries of a lot of trusts are the people who set them up and run them, due to the large fees they get. Although they can be useful in some cases, such as a Disabled Persons Trust.

AIUI they come into their own more for wealthy people ( say £5M plus) and are less useful, often bringing more problems, for the merely mass affluent.

So questions:

1. What is your objective for considering a trust?
2. What is the likely size of your estate?
3. How old are you ?
4. Married? Children ?

Keep_pedalling

Franky you would be bonkers to do this. You don’t say what you are trying to achieve by doing this but purtting you home in trust while continuing to live in it does not reduce IHT as it will be considered a gift wth reservation of benefit. This could also lead to the double whammy of adding a CGT liability on top of IHT.

If the idea is to avoid care costs you need to look up deliberate deprivation of assets. You also need to be away that depending a cash strapped LA to meet your care needs is

For most people trusts are far from some magic formula to avoid IHT and care costs and in many cases turns a simple estate into a complex one that your loved ones will have to deal with. There are several threads on this board where loved ones have had to spend considerable time and money sorting out an estate with a poorly thought out trust involved.

The only trust that is possibly worth thinking about is an immediate post death interest trust that would protect the assets (including a share of your home) from the surviving spouse remarrying and for care costs for the surviving spouse.

I recomend you avoid national companies, and find a local solicitor qualified to advise on trusts (STEP) to draft your wills and put nothing in trust involved your lifetime unless your net worth is in the multi millions.

Bookworm41

https://forums.moneysavingexpert.com/discussion/comment/82002784#Comment_82002784

Yes it is, I have read that post this morning.
They do have some negative reviews on Trustpilot, often about not responding to things. Realistically it can't be perfect and I know from work that contracts can have mistakes which need editing but what didn't sound good in this situation was being asked to sign it ahead of the amends, that is a major red flag.

Bookworm41

https://forums.moneysavingexpert.com/discussion/comment/82002792#Comment_82002792

1. What is your objective for considering a trust?

It was something we came across after we paid our mortgage off last year and did lasting power of attorney and we had been told it was a good way to secure your property for beneficiaries as it guarantees it for them (sideways inheritance etc)

1. What is the likely size of your estate?

Unless we win the lottery it won't be huge, my property will be currently valued at around £135k and we have some savings.

1. How old are you ?

56 and 41

1. Married? Children ?

Married, one child

Bookworm41

https://forums.moneysavingexpert.com/discussion/comment/82002808#Comment_82002808

Wow thanks for that link, I hadn't seen a mention on the Will Associates before

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82002828#Comment_82002828

What you were told is rubbish, there is no way that you should go ahead with this, all you will be doing is paying a large fee for a useless trust.

QrizB

my property will be currently valued at around £135k and we have some savings.

Unless your "some savings" is many hundreds of thousands of pounds, I'd suggest you're a long way from having to worry about inheritance tax yet.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82002828#Comment_82002828

There is no circumstance at all where a living trust should be created for a property of such small value.

You are being preyed upon by this firm for their own financial gain. Do not do it, and restrict your estate planning to cheap simple wills.

Incidentally, the company is not regulated by the SRA. It apparently does have regulated people working for the firm but that does not provide the same protection particularly with regard to access to the SRA's own compensation fund, if the firm goes belly up you are on your own - see below

https://www.sra.org.uk/consumers/register/organisation/?sraNumber=607899

Finally the last published accounts for the company should make very concerning reading if prospective clients believe they are dealing with a business of substance -

https://find-and-update.company-information.service.gov.uk/company/11177531/filing-history