As part of your Estate Planning, a family protection trust can be created to safeguard your assets and ensure they ultimately pass to the beneficiaries, no matter what happens. Used as a means to protect your estate from inheritance tax, ex-spouses, bankrupt or wayward children and changes in circumstances that could result in your wishes not being carried out. A family protection trust can also help protect assets for vulnerable people and can help protect assets from care home fees however, it is important to be aware that a family protection trust or any kind of trust set up during ones life cannot be established for the sole purpose of protecting a home from care home fees.
IWC Estate Planning and Management can help you plan for the future and avoid a multitude of scenarios that could either deplete your estate or result in your beneficiaries not inheriting their entire legacy. A family protection trust can help.
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The Benefits of a Family Protection Trust
It is established in your lifetime and allows assets to be held for a certain length of time. Property, cash or investments are transferred to the family trust and are in effect no longer owned by you, although you do have a lifetime interest. Here are the main advantages to this:
Care Home Fees
If you or your spouse should ever require residential care and you have assets over £21,000, including the family home, you`ll have to cover the cost without any help from local authorities. It is thought that between 40,000 - 70,000 family homes are sold every year to cover the owner`s care fees. This can be avoided with the use of one which will safeguard your family home. If your assets are held in a trust for more than 6 months, they`re not included in local authority means testing. This has the potential to save you between £20,000 and £50,000 a year in care home fees. Please note a family trust cannot be created for the sole purpose of protecting from care home fees.
It can be used to mitigate inheritance tax liability. For tax purposes, you could hold assets that amount to less than the nil rate band in trust, this means a couple could protect up to £650,000 (2 NRB at the time of writing). Under current inheritance tax law, any assets that are held in a trust for more than 7 years are subsequently exempt.
In the current economic climate, the chances of beneficiaries having financial problems, including debts, bankruptcy or insolvency has increased. Should this beneficiary inherit your assets, they would be taken into account by creditors. It offers complete flexibility where trustees could delay payment until any problems are dealt with. Similarly, assets held in a family trust would not be included in any divorce settlement.
IWC can help you protect your family`s future and safeguard their legacy and family trusts uk can help, for more information about setting up a family protection trust, call us.