Family Protection Trust FAQ

1. Why should I bother?

You do not need to do anything but if you go into care then it is likely that a large part of your assets, including your home will be used for care costs instead of going to your family.

2. But my family will look after me!

Hopefully you will never have to go into care but unfortunately one in three women over the age of sixty five and one in four men over sixty five do go into care at some time so it can never be ruled out. We are all living longer and so the chances that we might need care later in life are increasing. Whilst family might have the best intentions in wishing to take care of you, in reality, it may not be a realistic option.

3. Is it worth it?

If the scheme saves you having to pay say £30,000 (roughly one year in care), or more towards your care costs, then clearly it is worth it.

4. What if I do not go into care?

It is still worth it as it will save the time and trouble involved in winding up your estate. If your house is still in your names when you die then you will need a Solicitor to carry out the Probate procedure which could cost several thousand pounds. If however, the house is in the Trust then the remaining Trustees can deal with the house immediately after you die and thereby avoid the Probate procedure altogether.

5. Who should be the Trustees?

You are free to choose your own Trustees. It is usual for you to be Trustees along with others, including Solicitors. You may also want to include a family member such as a son a daughter or both. The Trust can be prepared with guidance to your Trustees as to the way in which you wish your family Protection Trust to operate.

6. Can I trust the Solicitors?

Yes, of course you can, Solicitors are professional people. They are not beneficiaries in the Trust. They cannot benefit from the Trust in any way and like all Solicitors they are supervised and controlled by The Law Society. They are also covered by full Professional Indemnity Insurance.

7. What about ongoing fees?

There aren`t any. With this scheme you pay the costs at the beginning and you have nothing further to pay unless you go into care and there is a dispute with the Council which is rare.

8. Can I change my mind?

It may be possible to end the Trust. This will be explained more in the meeting with our legal representatives.

9. Can I move house?

Yes. However the Trustees will be responsible for signing a Transfer to sell your house rather than you alone.

10. What happens if one of us dies?

The Trust can continue as before. If there are reasons why it might be more appropriate to end the Trust this can be considered

11. What happens if one of the Trustees dies?

A new Trustee would be appointed in their place. This would be someone chosen by the remaining Trustees.

12. Who gets my Estate when I die?

Whoever you have left it to in your Will. When you die it is up to the Trustees to decide who is to get what but the Trustees will simply look to see what you put in your Will and that is what will happen.

13. Does my Will not matter then?

Your Will is still very important. Any of your Estate that is not in the Family Protection Trust when you die will be dealt with in terms of your Will and any estate which is in the Trust will be dealt with accordingly to the wishes expressed in your Will.

14. Who can set up a Family Protection Trust?

Anyone at any age, so long as they are mentally capable of doing so. To have the requisite mental capacity the client must understand the nature and effect of his or hers actions and the value of his or hers assets.

18. Is there any limit on the value of assets placed within a Family Protection Trust?

No, but if the client is placing assets in excess of his or her available Nil Rate Band within the Trust this would create an immediate charge to Lifetime Inheritance Tax (20% on the value over the current Inheritance Tax Nil Rate Band placed within the Trust).

19. When is the best time to set up the Family Protection Trust?

As soon as possible. Local authorities can retrospectively review the circumstances in which a Family Protection Trust was set up at any time. Clearly if the Family Protection Trust was set up at a time when the client was in good health, living independently and had no prospect or intention of entering Long-Term care then there should be no problem. However Local Authorities can review medical and other records and so any pre-existing medical condition or even comments made whilst in discussion with Local Authority social workers or carers could become relevant at a later date.

20. Can a Family Protection Trust be set up after a client enters care?

Yes. This would be a deliberate deprivation of capital and therefore would not work for care costs. But it may still be an appropriate measure for some clients.

21. Who are the beneficiaries of the Trust?

Whoever the client decides. Clients usually have their children and grandchildren or other beneficiaries named in their Will in mind. Therefore all names and addresses are required along with the relationship to the client of all beneficiaries under the terms of the Trust. This can be discussed in more detail with our legal representatives.

22. How long does the Family Protection Trust last and in what circumstances does it end?

Technically, the Family Protection Trust lasts eighty years but it will usually be closed down by the Trustees upon the death of the client. However if the client decides it is appropriate the Trust can continue after the client`s death if this is required. Some clients have a particular reason for wishing this e.g. one of the beneficiaries is disabled and the client wishes them to benefit from the Trust but not be assessed as having an absolute right to the capital because perhaps they are in receipt of means-tested benefit. If there are such relevant circumstances we need to know this when setting up the Trust.

23. What if the client wishes to sell their present home and purchase another?

This is no problem. To place a house or a share of a house within a Family Protection Trust it will be transferred to the Trustees. If the client wishes to move the Trustees simply sell the house and purchase another. Any left-over sale proceeds are still protected by the Trust and will simply be added to other savings (if any) and invested by the Trustees.

24. What if some of the savings within the Trust are needed by the Client?

If this is for the client`s benefit e.g. to pay for holidays, household items, a new car, then the Trustees will release funds for this to the client. If however they consider this might create a `deliberate deprivation of capital` problem then they will raise this with the client and ensure that he or she understand this. There should be no problem so long as it can be demonstrated that any payment is for the Client`s benefit.

Remember if you want your assets to go to your family and not to the Council you need a trust.
If you don’t want your family to pay large fees when you die you need a trust and the sooner you do it the more likely it is to work for you.

Please call us free on 0800 043 2811 for further information or contact us here.

 
 

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Family Protection Trust FAQ

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