Trusts are not just for the wealthy says law firm Adams & Remers

Date: 28 Jul 2010


The assumption that trusts are only useful for financial planning for the wealthy should be revisited by people looking to reduce their exposure to nursing home fees says Adams & Remers LLP.

Lisa Gibbins, solicitor at Adams & Remers comments: “Whilst most people probably associate trusts with the wealthy it is also beneficial for those with assets below the inheritance tax nil rate band to consider putting their property into a trust because this means only half of the asset will be assessable for the purposes of local authority care home funding.”

“This arrangement would be useful where a married couple have assets of less than ¬£650,000 (being the tax free allowance for Inheritance Tax); regardless of whether this is made up of property or cash. They can prepare wills leaving their assets into trust, so that the trust owns half of their estates, and the surviving spouse owns the other half. At a later date, when the survivor needs to go into a nursing home, the local authority can only assess the survivor’s share of the estate (i.e. ¬£325,000) when considering whether he or she should fund their own care. Once the survivor has used up all but ¬£23,250 of their own assets to pay for care, the Local Authority will assist with paying fees.

The assets in the trust are ring-fenced for your choice of beneficiaries, and although they can be accessed by you to pay for your fees if this is necessary, the Local Authority cannot count to the funds in trust when determining whether you have more than £23,250.

Lisa Gibbins continues: “The advantages of using a trust in this way really benefits those who may have done little about their financial planning as they fall under the Inheritance Tax threshold, however IHT isn’t the only area that people should plan for as there is a greater risk that later in life their estate may be swallowed up by the cost of care home fees”.

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