Responses to negative publicity around Family Protection Trusts or Asset Protection Trusts
Our Director Stewart Moore responds to the negative publicity surrounding Family Protection Trusts or Asset Protection Trusts
Read his article below.
1. Family Protection Trusts or Asset Protection Trusts don’t work
We often hear this statement from other Will-writers, solicitors, legal services companies and anyone else who professes to have an opinion (qualified to do so or not) on the subject. The fundamental error in this statement is that it starts with the assumption that the reason the Trust was set-up in the first place was to avoid long-term residential care fees. As we all know, assumptions are a dangerous thing. There are many reasons (which we explain in depth in other areas of our website) why our clients decide to arrange their estate and affairs through the set up of a Family Protection Trust. These reasons do not include the avoidance of residential care fees.
But why is this important? It’s important because the intention of a client in setting up their Family Protection Trust is paramount in the underlying legislation and the consideration that Local Authorities have to evaluate if indeed a client with a Family Protection Trust requires long-term residential care in the future. If it can be shown that the client’s intention (significant purpose in terms of the relevant legislation) in setting up their Family Protection Trust was not to avoid long-term care then the Local Authority cannot assume that it was indeed for care avoidance purposes.
However, for couples it is completely permissible to avoid one spouse’s share of the joint estate being used to pay for their spouse’s long-term care provision. Our Family Protection Trust covers this scenario.
And for all the other benefits of the Family Protection Trust the avoidance of care is simply not relevant. Our Family Protection Trust works for all those reasons.
2. Are Asset Protection Trusts the next mis-selling scandal?
It is true that Asset Protection Trusts can be mis-sold. It’s easy for unscrupulous advisers (or simply mis-informed advisers) to make bold claims that by simply transferring your house to an Asset Protection Trust will mean that you will avoid having to sell the family home if you were to go in to long-term residential care in the future. And it’s true to say that there have been unfortunate incidents of this occurring. As explained above, the rules around the payment of long-term care fees are far more complex than that. It is right that people should be wary of bold claims or guarantees of “success”. That’s a certain indicator that the adviser they have spoken with doesn’t fully understand the rules in this area. If something sounds too good to be true then it usually is!
That’s why it is imperative that if you are considering arranging an Asset Protection Trust or Family Protection Trust it pays in the long-term to use a specialist in this field. We go on below to explain why that should be McClure Solicitors.
3. There are other, usually cheaper, ways to address protection of assets from care home fees?
Again, this line of argument starts from the assumption that the rationale behind a Family Protection Trust or Asset Protection Trust is to avoid paying for long-term residential care fees. Most of the benefits of a Family Protection Trust can only be achieved through a discretionary Trust set up and administered during the client’s lifetime.
Discretionary Trusts set up in someone’s Will mean necessarily that they only ta