An assett protection trust is a separate legal entity that holds property or assets of some kind for the benefit of a specific person or group of people known as the beneficiary or beneficiaries. The person appointed to oversee or manage the trust is called the trustee.
To avoid the problems of gifting assets to individuals
Gifts of the family home to individuals can cause problems. For example:
1. The person receiving the gift (the “donee”) can dispose of the property against the wishes of the person making it (the “donor”).
2. The donor at some point in the future may want to move home. If they have transferred their home they will need the consent of the donor to move.
3. The donor may lose their home if the donee becomes bankrupt or gets divorced.
4. The donee may become liable for capital gains tax in the future.
5. The donor’s entitlement to means tested state benefits may be affected.
6. A dispute may arise between the donor and the donee about maintaining the property.
To avoid these pitfalls the donor can consider gifting their property into a trust.
To protect the interests of vulnerable people
Disabled persons trusts are available for those suffering from a physical or mental disability. Provision can be made for a vulnerable person in lifetime or through a will. A trust set up for a disabled person may attract favourable tax treatment compared with other trusts. A disabled person can be one of several potential beneficiaries in a lifetime discretionary trust. Each type of trust has its own tax regime and therefore consideration must be taken before deciding which type of trust is best for the vulnerable person.
To avoid care fees
Transfer of an asset into a trust does not guarantee avoidance of care fees. Local authorities can, when deciding a claim for assistance, look for evidence of deliberate or intentional deprivation of capital. A transfer of capital will be regarded as deliberate if a person transfers an asset out of his or her possession in order to put him or herself in an improved position to obtain assistance. Deprivation must be deliberate and its effect must reduce resources available to pay care home fees which are clearly and to the knowledge of the person making the gift likely to fall due in the near future. It need not be the only motive; it must be a significant one. Whilst the purpose of setting up the trust may not be to avoid care fees, its implementation may have this effect. In the context of planning for any future financial risks, it is always better to have a position to negotiate from. If assets are in a person’s name they are always open to attack and claims of third parties against that person. Distancing oneself from the legal ownership enables a negotiating stance to be taken and may make it more likely than not that residential and nursing care fees are avoided.
To avoid inheritance tax
Inheritance Tax (IHT) is a cumulative tax that applies to transfers made on death and during lifetime. It is payable on transfers made in excess of the nil rate band. The nil rate band is a value of assets on which IHT is not paid or said to be paid at “nil rate”. At present the nil rate band is £325,000 per person. Tax rate on death is 40% and on lifetime transfers 20%. A trust may be useful where you wish to make a lifetime gift to avoid tax but do not want to make a gift to an individual.
Asset protection through the provision of trust is complex. It is important to have the right information and guidance to make an informed decision. We have an experienced team of professional advisers who can help you decide how best to protect your assets so they can be enjoyed in later life and passed to the next generation.
Absolutely great service, professional and efficient. I would highly recommend Ian Fraser and Alison Allen. 5 star
Extremely professional, attentive to my needs and quick resolution to all issues that arose throughout my purchase.
They carried out the conveyancing thoroughly and efficiently and appreciated the fact that they always made time to see me and address my concerns. I would be very happy to work with them again and already highly recommend them.
I have been a client of Stennett and Stennett for a while now and have always found them professional, efficient, understanding and caring. Michael Stennett in particular has advised and helped me in dealing with the administration of the Power of Attorney for both my parents and has always gone out of his way to provide a friendly and attentive service. I would not hesitate in recommending them to friends and family and will always use them in any future legal transactions when I need legal advice.
Without hesitation I can say Stennett & Stennett kept me well informed by periodic updates about the progress of the estate, and what options were available and advised accordingly but always asking what i wanted to do .His services were definitely efficient and courteous
I was seen on time and the service was very good.
All the members of Stennett & Stennett have been very friendly & efficient since we first started using the company quite a few years ago. They have recently dealt with, what could have been, a tricky situation very successfully & we are very happy with the outcome. We will continue to use their services.
As always Stenett's have given us professional, supportive and helpful service. Thank you very much. The professionalism of all Stennett's staff far outweighed that of the other solicitors in our conveyancing chain.
We received very professional and fast service from Stennett & Stennett right from the first phone call. I called in and asked for a particular service for which I was put through to the right person straightaway. Debbie was very knowledgeable and offered us to come in for a free of charge consultation with a solicitor, which we did. During that meeting with Mr Stennett he arranged for the right documents and forms to be sent to us and made another appointment to come in and sign the prepared contracts. That's it! Many thanks.
A big thank you to Stennent & Stennent Solicitors, for helping my 94 years old Auntie to move into her new retirement home. They were very kind and considerate towards my Auntie and explained everything very clearly to her. With their calm attitude and approach it avoided any stressful feelings for her. I strongly recommend you use their services. Thanks again Stennent.
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S&S offices have a calm atmosphere and on the telephone. I had clear legal advice which was completely accurate and down to earth. This helps when to go to a solicitor, sometimes in a state of unknowing and worry. I had quite severe concerns, things did go wrong and I found the atmosphere of calmness and in going forward toward solving matters reassuring.
WE used Stennett and Stennett to enact a power of attorney and when my father subsequently died they dealt with the financial affairs of his estate and the sale of the house. This was done sensitively and efficiently, keeping the family informed at all times of how things were progressing.
Michael Stennett has handled our family's business over the last few years with great professionalism and charm. I am aware that our case has been extremely challenging and complex and am delighted that we have achieved a satisfactory outcome in the end. Thank you for your patience and perseverence - I would gladely recommend Stennett and Stennett's services to anyone!
They took the time to explain all of the procedures and answer my questions, no matter how trivial they were. They were professional throughout and made sure that our options were always clear and provided guidance without being forceful. They are very efficient and represent excellent value for money. Alison Allen is one of the most professional and helpful people I have ever had the pleasure of dealing with and made the whole process so easy.
Stennett & Stennett
4 Winchmore Hill Road
DX: 34305 Southgate
Stennett and Stennett is the trading name of Stennett and Stennett Ltd registered in England and Wales under CRN 7666275 and whose registered address is:
4 Winchmore Hill Road, Southgate, London, N14 6PT. Authorised and regulated by the Solicitors Regulation Authority no. 564879