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Trusts & Protecting Your Assets

Protecting your assets

A question often asked is how do I protect my assets?  There are many reasons why you might be thinking about this perhaps:

  • You are getting married again and want to ensure that your new spouse is secure but so will your children be in the long term;
  • Your children may be getting divorced or experiencing financial difficulties and you wish to protect any inheritance you may wish to leave them;
  • You may be concerned what may happen should you need residential or nursing care in the future.

The use of Trusts to cover these eventualities is quite common and is often not as complicated or expensive as you may fear.

At mfg solicitors LLP we prepare many different types of trust, but for the purpose of protecting your assets the main use of trusts is as follows:

Trusts in Wills

When making your Will it is not only deciding who should receive your assets but when and how.  In later life you may wish to get married again and if you have children from a previous relationship you may wish them to benefit from your estate but are concerned that your new partner/spouse should not have to sell the house.  This concern can be overcome by having the correct advice and Will and in brief terms you could allow your spouse/partner the right to live in the house after your death but upon their death your share in the house passes to the beneficiaries you have named in your own Will.  This type of trust is usually very simple to deal with.

You may also wish to consider the use of a trust in your Will to protect your beneficiaries.  You may be concerned that your beneficiaries may not deal with inheriting money in one lump sum, they may be experiencing financial difficulties or they may be going through a divorce.  You can provide for their share of your estate to be held in a discretionary trust.  Whilst the specifics would be discussed with you, in brief terms a discretionary trust is when your chosen Trustees have complete discretion over how your named beneficiaries benefit, whether that is by paying them an income, paying out capital or retaining and investing those monies for a later date.  A beneficiary of a discretionary trust has no automatic right to receive anything from the trust fund, just a potential one.

Lifetime Trusts

You may wish to set up a trust during your lifetime.  In its simplest form this trust involves the transfer of your home to your chosen Trustees upon trust that provides that you have the right to reside in the home.  Your home can be sold, with your consent, and the proceeds reinvested in another property or invested to produce an income if the house were sold (for example should you go into residential care).  The capital remains protected and upon your death the property would pass to your chosen beneficiaries.

Due to various rules that relate to giving away assets the timing and intention behind you setting up the trust is very important.  The Local Authority may investigate and discover that you have deprived yourself of the asset to avoid paying care fees.  Careful advice and consideration should be sought and we have an enviable record of success in protecting assets using these trusts.

If you have already moved into a care home or such move is imminent we have a specialist team that can advise you on other relevant considerations to protect assets, maximise NHS contribution and ensure that your needs are met.