Family Protection Trust

Family Protection Trust

A lifetime discretionary Trust also known as a Family Protection Trust allows you to leave your family the majority of their inheritance in Trust, ensuring it goes to them and not to someone else or another institution.

The Trust acts like a safety deposit box, where you can put your house and other financial assets. Setup whilst your alive it will protect those assets from future threats and when you die the trust is then transferred to your chosen beneficiaries.

The trust is created in your name and you own the trust. The assets are still yours, unlike transferring to relatives, you remain in control. You are the owner of the Trust and you are also a trustee and beneficiary of your own Trust.

The Trust can do everything you can as an individual. You can still sell, move and invest. You remain in control of your assets.

A lifetime Discretionary Trust offers a number benefits for your estate:

1. Probate Benefit – Any assets held in trust, there is NO probate. With the average fee of 4% the trust offers a significant saving, not only in terms of money, but in actual time and effort it saves for loved ones at a stressful time. With probate taking on average 6-9 months to complete, assets held within trust are normally transferred within weeks.

2. Care Benefit – If a person is taken into care then, under the Community Care Act 1990, the local council have the right by law to seize their home, sell it and use the proceeds to support their long-term care costs, leaving only £23,250. This could mean there could be very little of their estate left for their family.

Assets held within Trust are disregarded during the care fees means assessment. In order for local authority to successfully contest the Trust they have to prove the client deliberately deprived themselves of assets in order to avoid paying for care. As long as you are reasonably fit and healthy when the Trust is setup the Local Authority can’t assume that avoiding paying for care was the purpose.

3. Relative Claims – If a dependant relative does not consider that they have been adequately provided for in the will, they could claim against the estate. The will could be ignored and they could benefit. Unless “reasonable provision” has been made in your will for children and some other relatives, the courts could, overrule and the will and distribute your estate against your wishes. Placing your assets in Trust could avoid this and ensure only your named loved ones inherit.

4. Remarriage – Assets held within Trust are protected from remarriage. If the deceased’s spouse remarries, the inheritance could pass to another family, missing out the deceased’s children.

5. Inheritance Tax – Often when an inheritance is left to children they create an inheritance tax problem for their children. The Trust enables the parents to pass on the inheritance without creating an inheritance tax liability. Assets held in Trust will not form part of their estate so will not attract inheritance tax issues.

6. Inheriting At The Wrong Time – When the time comes it may not be the best time for your loved ones to receive their inheritance,

  • Divorce – Partner entitled to 50%
  • Bankruptcy – Inheritance will go to creditors
  • Benefits – Support lost or reduced
  • Drug or alcohol dependency

With the assets being held in Trust they can choose when to inherit still allowing them to benefit from their inheritance.