The rising cost of care home fees in the UK has become a significant concern for many people as they age. The prospect of depleting their life savings to cover care costs can be overwhelming. One potential solution is to consider using a discretionary trust to protect your assets.
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For a free initial discussion on how we can help you deal with the legal implications of creating a Trust, get in touch with us today. We are also experienced in dealing with all aspects of Wills and Probate and we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
What is a Discretionary Trust?
A discretionary trust is a legal arrangement where property is transferred to trustees who have the power to decide how the income and capital of the trust will be distributed. Unlike an interest in possession trust, where the beneficiary has a fixed right to income or capital, a discretionary trust allows the trustees to exercise their discretion in making distribution decisions.
How Can a Discretionary Trust Help Protect Your Assets?
A discretionary trust can be a valuable tool for protecting your assets from potential care home fees. Here’s how it works:
- Transfer of Assets: You transfer your assets, such as property, investments, or cash, to the discretionary trust.
- Trustees’ Discretion: The trustees have the power to decide how the trust property is distributed, including who receives the income or capital.
- Deprivation of Capital: If you require care and your assets are assessed by the local authority, they may consider the trust property when determining your eligibility for financial assistance. However, if the trustees can demonstrate that you have no control over the trust property and cannot benefit from it, the local authority may be less likely to include it in the assessment.
Key Considerations When Using a Discretionary Trust
Before deciding to use a discretionary trust to protect your assets, it’s important to consider the following factors:
- Cost: Setting up and managing a discretionary trust can involve legal fees and ongoing administration costs.
- Loss of Control: Once you transfer your assets to the trust, you generally lose control over how they are managed and distributed.
- Potential Challenges: There may be challenges in proving that you have no control over the trust property if the local authority disputes your claim.
- Tax Implications: The transfer of assets to a discretionary trust may have tax implications, such as capital gains tax or inheritance tax.
Strategies for Maximizing Protection
To increase the effectiveness of a discretionary trust in protecting your assets from care home fees, consider the following strategies:
- Careful Planning: Work with a legal professional to carefully plan the trust to ensure it aligns with your goals and minimizes the risk of challenges.
- Choice of Trustees: Select trustees who are trustworthy, reliable, and willing to act in your best interests.
- Clear Trust Deed: The trust deed should clearly outline the trustees’ powers and discretion, as well as any restrictions or conditions.
- Regular Reviews: Review the trust regularly to ensure it remains effective and aligns with your changing circumstances.
Blackstone Solicitors: Your Trusted Legal Partner
At Blackstone Solicitors, we understand the complexities of estate planning and asset protection. Our experienced team can provide expert guidance on using discretionary trusts to protect your assets from care home fees. We can help you:
- Assess your needs: Evaluate your financial situation and care needs to determine if a discretionary trust is suitable for you.
- Draft the trust deed: Create a tailored trust deed that meets your specific requirements.
- Choose the right trustees: Select suitable trustees who will act in your best interests.
- Provide ongoing support: Offer advice and assistance throughout the life of the trust.
How we can help
We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Wills and Probate Solicitors
It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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