By Bill Thomson, Director at Legacy Planning Solutions.
There was an article recently on the BBC’s web site about arranging a Trust to avoid care costs.
It is absolutely correct that, if the sole reason for transferring assets into Trust is to avoid care costs when care is already on the horizon, such a tactic will fail because it amounts to deliberate deprivation.
I am often contacted with a view to arranging a Trust and I would be surprised if, somewhere at the back of the client’s mind, there was not the thought of losing their home to care costs.
However, if you make arrangements whilst you are fit and healthy – regardless of age – and for the right reasons, such a transfer can protect assets against care costs.
Trusts can do so many things and it should not be looked upon purely to avoid care. That’s self-defeating.
Trusts can greatly reduce, and possibly remove completely, the costs of winding up an estate which can run into many thousands of pounds and can be far more expensive than setting up a Trust.
Trusts can last for 100 years so the inheritance of future generations can be protected against matrimonial and financial threats – who knows what your grandchildren are going to face in the future. Trusts can help protect them.
And there are many other reasons for a Trust too numerous to mention here.
However, if clients’ health is failing and care is on the horizon, there is still something that can be done.
It is not uncommon for a spouse-carer to die before the spouse they are caring for. It is madness for elderly spouses to leave their homes to each other if one of them is failing. Yet so many houses are owned with a survivorship clause which means that the surviving spouse will automatically inherit the whole house. If they then need to go into care, the whole house will be up for grabs top pay for care.
In this situation, there is good – unchallengeable – estate planning that can be done to avoid this happening. So, all does not need to be lost.
However, the message is to make your arrangements well in advance. Don’t wait until you need to do it and when the only reason is to avoid care costs because then it can be too late.
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