The local authority will seek to take your home should you or your spouse/partner end up in care; however, you can protect against this.
A client of ours, Mr & Mrs A – Mr A passed away three years ago, and Mrs A was to go into care. According to Mrs A’s daughter Margaret, the care home first asked about Mrs A’s house to see if they could take it. Luckily, we prepared Mr & Mrs A’s will with trust four years ago. It meant that the property couldn’t be touched. Mrs A gets her care provided free of charge, and her home will pass to her daughter on Mrs A’s death.
The Importance of Planning Ahead
When it comes to care home fees, many people only realize the significant financial impact when it’s too late. The experience of Mr. and Mrs. A highlights why making a will is essential. By including a trust in their wills, they protected their home from being used to pay for care costs. This forward-thinking decision ensured that Mrs. A’s future was secure and that their daughter, Margaret, would inherit the family home.
How Trusts Work?
A trust is a legal arrangement where one or more persons, known as trustees, hold assets on behalf of others or beneficiaries. In the case of Mr & Mrs A, the trust was designed to protect their home. When Mr A passed away, his share of the property was transferred into the trust. It meant that when Mrs A needed to go into care, her home was not considered part of her assets for means-testing purposes.
Different types of trusts are available, and the choice of trust will depend on individual circumstances. The most common types used for this purpose are:
- Life Interest Trusts allow the surviving spouse or partner to live in the property for the rest of their life, after which the property passes to the beneficiaries.
- Discretionary Trusts: These give trustees the flexibility to decide how the assets in the trust are used.
Benefits of Setting Up a Trust
Setting up a trust can offer several benefits, including:
- Protection from Care Home Fees: As demonstrated in Mr & Mrs A’s case, a trust can prevent your home from being sold to cover care costs.
- Control Over Your Assets: A trust allows you to specify how and when your assets will be distributed.
- Peace of Mind: Knowing your loved ones will be provided can bring peace of mind.
Steps to Set Up a Trust
Setting up a trust involves several steps, including:
- Seek Professional Advice: It is essential to seek advice from professionals who can guide you through the process and ensure the trust is set up correctly.
- Choose Your Trustees: Trustees will be responsible for managing the trust, so it is essential to choose individuals you trust.
- Decide on the Type of Trust: Based on your circumstances, select the type of trust that best suits your needs.
- Draft the Trust Deed: This valid document outlines the terms of the trust.
- Transfer the Assets: Finally, transfer the assets into the trust.
Common Misconceptions About Trusts
Several misconceptions about trusts often deter people from considering them as an option:
- Trusts Are Only for the Wealthy: This is not true. Trusts can be beneficial for individuals with various levels of assets.
- Trusts Are Complicated: While setting up a trust does involve some complexity, professional guidance can simplify the process.
- Trusts Mean Losing Control Over Your Assets: Trust can provide greater control over how your assets are managed and distributed.
Why Choose I Laws Scotland?
At I Laws Scotland, we understand the importance of protecting your assets and ensuring your loved ones are cared for. Our experienced professionals are dedicated to helping you navigate the complexities of setting up a trust. We offer personalised advice tailored to your specific circumstances, ensuring your wishes are respected and your assets safeguarded.
Conclusion
The case of Mr & Mrs A highlights the importance of planning and seeking professional advice to protect your home from care home fees. By setting up a trust, they could ensure that Mrs A’s care needs were met without risking their home. This proactive approach provided peace of mind for Mrs A and her daughter, Margaret.
Contact us today if you are concerned about protecting your home and assets. Our team is here to help you explore your options and find the best solution for your needs. Planning can make all the difference in safeguarding your future and that of your loved ones.
