Does anyone know anything about these? My Dad has Alzheimer's and an "Estate Planning Consultant" has advised my mum to put his half of the house into an asset protection scheme, in case he needs to go into full time care. He's told her it'll cost about £3k to do this. Is she being ripped off? Is it even legal (or ethical) to do this? Any advice appreciated!
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Family Asset Protection Trusts
- Thread starter Ric
- Start date
Blue Hefner
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- 11 Jul 2009
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I can’t help you, unfortunately. Have spoken to Citizens Advice Bureau? I know it’s harder that it used to be to arrange an appointment but could be worth a chat with them
Hi Ric, I am sorry to hear that your father has this awful disease.
These schemes do exist whereby (presumably) your parents currently own their house as joint ownership, so the consultant is recommending on changing this with the land registry to tenancy in common, where they then own 50% each.
I gather from your post, the idea of this is to protect your mothers 50% from any of your fathers care which could become very expensive. In principle these trusts are created for blood line planning purposes to prevent sideways inheritance, i.e if one of your parents died and the other later remarried. This type of trust ensures your mothers 50% of the house goes to who she wants it to go, so yourself and any siblings etc. HOWEVER, I do believe as your father has Alzheimer I think the consultant is treading on dodgy grounds and it could be viewed by any authority that this is a deliberate act of deprivation of assets and thus mean the trust and money spent was a waste of time.
This should have been done some time ago. I do think the cost of 3k is excessive also. To do a protective property trust you should expect to pay around £800-1000. I can give you details of a firm I know who are reliable and can point you in the right direction, without obligation.
These schemes do exist whereby (presumably) your parents currently own their house as joint ownership, so the consultant is recommending on changing this with the land registry to tenancy in common, where they then own 50% each.
I gather from your post, the idea of this is to protect your mothers 50% from any of your fathers care which could become very expensive. In principle these trusts are created for blood line planning purposes to prevent sideways inheritance, i.e if one of your parents died and the other later remarried. This type of trust ensures your mothers 50% of the house goes to who she wants it to go, so yourself and any siblings etc. HOWEVER, I do believe as your father has Alzheimer I think the consultant is treading on dodgy grounds and it could be viewed by any authority that this is a deliberate act of deprivation of assets and thus mean the trust and money spent was a waste of time.
This should have been done some time ago. I do think the cost of 3k is excessive also. To do a protective property trust you should expect to pay around £800-1000. I can give you details of a firm I know who are reliable and can point you in the right direction, without obligation.
Ifwecouldjust.......
Well-Known Member
Does anyone know anything about these? My Dad has Alzheimer's and an "Estate Planning Consultant" has advised my mum to put his half of the house into an asset protection scheme, in case he needs to go into full time care. He's told her it'll cost about £3k to do this. Is she being ripped off? Is it even legal (or ethical) to do this? Any advice appreciated!
The little knowledge I have is that
1) Any action you take now is pointless if your dad has to go into social care in the next 7 years (its called a PET - Potentially Exempt transfer and can be disregarded if it is believed it was done to avoid social care costs)
2) They may place him in social care but they will only pay the 'social care rate' this will be a rate charged by Care home in the borough (usually the shittiest one and packed to gills) If you and your mum place him elsewhere you may have to pay the difference.
3) if they do fund care you will have a charge levied against the house (through the Land Registry). They will allow your mum to live in the property until she dies and then when the property is sold when they will reclaim their cash.
4) You may find that your mum and dad are both named as Tenants in Common on the House Deeds. Take advice from a solicitor as it may be best to crash that (this can be done by your mum simply serving notice on your dad and placing it with the Solicitor).This limits the asset that your dad has e.g a house worth £200,000 becomes halved as your dads share is reduced by 50%... once your dads assets fall below £23,000 the council have to fund him.
5) Take a second opinion on the proposed 'Asset Protection Scheme' as I was not offered that and simply went down the route of 4)
Oh and don't vote Tory ....
The little knowledge I have is that
1) Any action you take now is pointless if your dad has to go into social care in the next 7 years (its called a PET - Potentially Exempt transfer and can be disregarded if it is believed it was done to avoid social care costs)
2) They may place him in social care but they will only pay the 'social care rate' this will be a rate charged by Care home in the borough (usually the shittiest one and packed to gills) If you and your mum place him elsewhere you may have to pay the difference.
3) if they do fund care you will have a charge levied against the house (through the Land Registry). They will allow your mum to live in the property until she dies and then when the property is sold when they will reclaim their cash.
4) You may find that your mum and dad are both named as Tenants in Common on the House Deeds. Take advice from a solicitor as it may be best to crash that (this can be done by your mum simply serving notice on your dad and placing it with the Solicitor).This limits the asset that your dad has e.g a house worth £200,000 becomes halved as your dads share is reduced by 50%... once your dads assets fall below £23,000 the council have to fund him.
5) Take a second opinion on the proposed 'Asset Protection Scheme' as I was not offered that and simply went down the route of 4)
Oh and don't vote Tory ....
Re: your first point, this is not true. PETs are used for IHT purposes. There is no set time frame. Its based on what would be classed as deliberate. The case of someone setting up trusts AFTER an Alzheimer diagnosis would most likely fall into that category.
Ifwecouldjust.......
Well-Known Member
Re: your first point, this is not true. PETs are used for IHT purposes. There is no set time frame. Its based on what would be classed as deliberate. The case of someone setting up trusts AFTER an Alzheimer diagnosis would most likely fall into that category.
As i said my knowledge was limited..... my understanding was that any gifts that you give can also be taken into account when calculating Social Care
https://www.farleydwek.com/financial-planning-for-care/
The seven-year rule – ‘potentially exempt transfers’
Any gifts you make to individuals will be exempt from Inheritance Tax as long as you live for seven years after making the gift. These sorts of gifts are known as ‘Potentially Exempt Transfers’ (PETs).
However if you give an asset away at any time, but keep an interest in it – for example you give your house away but continue to live in it rent-free – this gift will not be a potentially exempt transfer.
If you die within seven years and the total value of gifts you made is less than the Inheritance Tax threshold, then the value of the gifts is added to your estate and any tax due is paid out of the estate.
However, if you die within seven years of making a gift and the gift is valued at more than the Inheritance Tax threshold, Inheritance Tax will need to be paid on its value, either by the person receiving the gift or by the representatives of the estate.
If you die between three and seven years after making a gift, and the total value of gifts that you made is over the threshold, any Inheritance Tax due on the gift is reduced on a sliding scale. This is known as ‘Taper Relief’.
SWP's back
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That’s still IHT mate and not relevant to Ric’s situation and his Dad won’t be able to gift the property and live in it (called a gift with reservation). Also, unfortunately, now that’s his Dad has been diagnosed with Alzheimer’s, it’s unlikely that there will be any trust that can help the situation as the local authority will look right through the trust.As i said my knowledge was limited..... my understanding was that any gifts that you give can also be taken into account when calculating Social Care
https://www.farleydwek.com/financial-planning-for-care/
The seven-year rule – ‘potentially exempt transfers’
Any gifts you make to individuals will be exempt from Inheritance Tax as long as you live for seven years after making the gift. These sorts of gifts are known as ‘Potentially Exempt Transfers’ (PETs).
However if you give an asset away at any time, but keep an interest in it – for example you give your house away but continue to live in it rent-free – this gift will not be a potentially exempt transfer.
If you die within seven years and the total value of gifts you made is less than the Inheritance Tax threshold, then the value of the gifts is added to your estate and any tax due is paid out of the estate.
However, if you die within seven years of making a gift and the gift is valued at more than the Inheritance Tax threshold, Inheritance Tax will need to be paid on its value, either by the person receiving the gift or by the representatives of the estate.
If you die between three and seven years after making a gift, and the total value of gifts that you made is over the threshold, any Inheritance Tax due on the gift is reduced on a sliding scale. This is known as ‘Taper Relief’.
@Ric mate, @bluedan has been entirely accurate and he’s saved me a job in replying.
SWP's back
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- 29 Jun 2009
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- 88,243
One other thing @Ric, whilst I’ve been offshore for seven years I’ve not been reaccrediting my ‘Long Term Care’ license so the ground may have changed and I may be unaware of something that has changed in legislation for these situations. (It’s a fair old mine field)
I’m also happy to give you the name of someone that may be able to offer a second opinion.
I’m also happy to give you the name of someone that may be able to offer a second opinion.
I know the guys behind https://www.farleydwek.com/financial-planning-for-care/ and they are very good at what they do. If you want an intro etc let me know