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Care home fees are arguably one of today’s hottest topics with many people concerned that their hard earned savings and property will have to be used to pay for their care thus meaning they will not be able to provide as they had thought for their loved ones when they die.

Perhaps in response to this, we have seen a sharp increase in the number of non-regulated companies actively advertising ‘Asset Protection Trusts’ or similarly named measures as a way to retaining control over ones assets both in lifetime and after death.

These companies often advertise free seminars during which people are encouraged to transfer their assets into trust. Clients who have attended these seminars often then come to see our Private Client team to discuss what they have been told, so we thought it would be a good idea to attend one of these seminars to see what was being offered.

During the presentation, bold claims were made as to how the provisions of many Wills do not adequately ensure that your chosen beneficiaries will benefit from your Estate. They focussed a great deal on convoluted and far-fetched scenarios in which, before you know it, on death everything you owned has suddenly passed to your ex-daughter in law’s step children’s spouses and so to avoid this, you should transfer your assets into a trust.

The presentation then moved on to talk about how the trust works. One particularly misleading concept was that you can absolutely control how such a trust is administered. Whilst you can leave a Letter of Wishes addressed to your Trustees expressing how you might wish your Trustees to act, any such instructions are not legally binding and Trustees must be able to act in their discretion. The idea of being able to impose restrictions and conditions on your Trustees was heavily promoted and sadly the fact that Letters of Wishes are not a guarantee that your wishes will be followed was not disclosed anywhere in the literature we were provided with.

Another alarming suggestion was that if you are in good health when you dispose of an asset, i.e. transferring your home into a trust, the Local Authority will not challenge your decision. At the time of writing, Local Authorities are entitled to carry out an investigation into the history of your assets, without time limit, and if the main motive for putting assets into trust is to avoid care home fees, they will likely view this as a “deliberate deprivation” and seek to reverse the transaction.

Trusts have been in use for hundreds of years and in certain circumstances are a great way to manage and transfer assets however, they are not suitable for all and sadly we are seeing an increasing number of instances where people have paid a lot of money to set up a trust that will not achieve what they thought it would.

If you are considering setting up an Asset Protection Trust or have received a leaflet promoting this idea, you can book a free 30 minute appointment to talk it through with someone from our expert Private Client team before signing on the dotted line. To speak to us call our Private Client team on 0800 988 3650, email or text LAW to 67777.