A Lifetime Trust enables you to protect your property or assets whilst you are alive.
Another name for these types of Trusts is an Asset Protection Trust. Unlike Will Trusts or Property Protection Trusts, which come into force on your death, a Lifetime Trust allows you to gift your property or assets into a Trust and you are allowed to carry on using the asset and living in the property.
WHO IS A LIFETIME/PROPERTY PROTECTION TRUST SUITABLE FOR?
A Lifetime Trust is for any person who understands their assets and who is mentally capable of making decisions on them. The Mental Capacity Act 2005 presumes that a person has capacity unless there is evidence to the contrary.
This can be a single person or a married couple. The younger the age that this is done the better.
The Trusts help pass inheritance down to children.
There is no requirement of probate after death for the assets in a Lifetime Trust.
Should the Government re-introduce the proposed 2017 probate fees, assets in a Lifetime Trust may save your family several thousand pounds in probate fees.
People can continue to live in a property that has been placed in a Lifetime Trust.
They can downsize from property placed in a Lifetime Trust.
Property Protection Trusts can offer protection from having to sell your home to pay for care home costs.
Lifetime Trusts can provide protection from creditors and claimants.
Asset Protection Trusts can protect assets from re-marriage by the widow/widower.
EXAMPLES OF THE BENEFITS
If your children inherit and subsequently divorce, their son-in-law or daughter-in-law could walk away with a large portion of your estate disinheriting their grandchildren. A Lifetime Trust avoids these problems by ring-fencing your assets for your chosen beneficiaries; no one but those named can benefit and their children and grandchildren's assets held within the Trust are protected in the event of a divorce.
If you or a child of yours are in business and wish to safeguard personal assets from future unforeseen business debts, then the Lifetime Trust can help keep them safe. It does not prevent bankruptcy, but it can avoid the assets held within the Trust being taken to satisfy the bankruptcy. This also can apply to subsequent generations should even grandchildren suffer financial difficulties.
Assets held in Trust are normally disregarded for care purposes provided that the Trust has been set up correctly and the assets ‘ring-fenced’ at the right time. If you were fit and healthy when setting up the Trust and could not have foreseen the need for care then the local Authority cannot make the assumption that your motive in setting up the Lifetime Trust was to avoid care home fees.
Therefore, the important piece of information to take away from this guide is – whatever you decide to do about protecting and preserving your assets, do it early.
It's never too early but can be too late!