What is an Asset Protection Trust?

What will happen to the value in my home if I need to go into a care home? Will there be anything left for my children to inherit? These are common concerns for many homeowners and as a result has lead to a growth in the mis-selling of so called ‘Asset Protection Trusts’.

These trusts are being sold as a means by which a homeowner can protect their property against care home fees. The advice being given is that by setting up a trust and placing the property into it during your lifetime, should you require residential care at a later date then the value of the property will be disregarded as you no longer own it.

Unfortunately, this is not the case. By placing your property into trust during your lifetime, not only have you lost control of it, but also, if your motivation for placing the property into trust is to avoid paying potential care home fees then the local authority will regard that action as a deliberate deprivation of capital. A deliberate deprivation arises where an individual transfers an asset out of their possession in order to reduce the amount they will otherwise be charged for residential care.

The cost of setting up this type of trust arrangement is substantial, with some individuals being quoted as much as £5,000. Some individuals are even being charged £2,500 where they have signed a contract, but have decided that they do not wish to continue.

In May of this year eight people were jailed for offences which include carrying out reserved legal work by preparing trust documents all related to the mis-selling of so called asset protection trusts to elderly clients: Promoters of asset protection trusts jailed for mis-selling STEP.

The specialist Trust team can offer qualified and professional advice on steps you can take to protect your property/assets from potential care home fees, whilst retaining full control of the asset. Please contact Rebecca Suthers on 01425 484848 or rebecca.suthers@ellisjones.co.ukto discuss this or other trust related matters further.