An Asset Protection Trust (APT) is one of the best ways to protect your estate and your assets when faced with long term care fees, but many people do not know about this legal tool, despite its increase in use. With long term care for the elderly an increasing strain on finances, lots of people are looking for ways in which they can safeguard their cash, assets and estate, enabling them to pay for long term care but still use their estate. Let’s look at why Universal’s APTs are often the answer.

When it comes to care fees, any assets held in trust are normally disregarded. So, as long as the trust has been properly set up and the assets ring fenced in this way, the trust offers great protection. We say ‘as long as the trust has been properly set up’, because APTs are a highly specialised area, and must be drawn up by experts in the field. In fact, many solicitors, IFAs and accountants refer people to Estate Legacy Services knowing that they use Universal and recognising our expertise and specialism in APTs.

How do Asset Protection Trusts work?

APTs work to protect your assets by holding assets in trust for your benefit during your lifetime. The benefit of this means that you have great flexibility and can move or release capital at any time without restriction. If you need to move into sheltered accommodation in your own old age, you can sell up and do so, using the cash generated by the sale as income.

Universal’s APT is fully reversible, meaning you can return your affairs to the way they currently stand should you ever have a change of heart.

The benefits of Asset Protection Trusts

Asset Protection Trusts are not only used by people who want to protect their assets from fees related to long term care. There are many other reasons people choose a Universal’s APT. The Trust creates a protective environment, saving loved ones significant amounts of money, and enabling your estate to pass to your family just as you wish. On the event of your death, an APT helps your family avoid the pressure of probate, saving them significant amounts of money in legal fees, time consuming delays and lots of heartache along the way. In fact, the assets held in trust are often paid out in a matter of days.

APTs also prevent claims on your estate claims, guard against sideways disinheritance and mean there will be no court of protection control. The trust can also protect your assets from being taken should you be subject to bankruptcy or unforeseen business debts. Should a personal relationship fail, an APT can provide you financial protection and peace of mind, protecting your estate for yourself and for any children who may be involved.

The benefits of APTs continue: they protect disabled or unemployed beneficiaries, allowing such beneficiaries to apply for assets you have placed within the trust without loss of benefits. The APT can also provide important protection from Inheritance Tax as assets held with the Trust do not form part of the taxable estate of your beneficiaries meaning that assets passing to your children will not be taxed on their death which could save your grandchildren thousands of pounds in inheritance tax.

Is is critical that you have your APT drawn up by a fully qualified and experienced professional, as it simply must be timed correctly and made completely watertight if it is to offer you full protection in the future. Talk to us about protecting your assets with an Asset Protection Trust. We are specialists and will happily give you the very latest guidance on this powerful legal protection tool.

If you’ve discovered that you’ve been appointed Executor or Trustee of someone’s Will, there are certain things you must be aware of. Executor and Trustee are important roles which carry specific legal duties, so our advice below will be invaluable if you find yourself in this position. Your duties as Executor or Trustee are:

•  Paying the funeral expenses of the deceased You will have responsibility for seeing that the Estate and assets are distributed in accordance with the deceased’s wishes (as per their Will)
• Is probate required? You need to find out and complete the paperwork
• You may need to deal with the Probate Registry (this might include an interview)
• Valuing the deceased’s Estate and completing Inheritance Tax forms
• You’ll need to collect the deceased’s assets, and then calculate (and pay) whatever tax is due on it
• Who are the Estate’s creditors? You’ll need to establish this, and pay them any outstanding debts
• Is Inheritance Tax due? You may need to work this out, taking into account legislation and exemptions
• If Grant of Probate is required, you will need to acquire it
• You’ll need to prepare the Estate accounts prior to them being signed by the beneficiaries
• You may need to liaise with Land Registry and Inland Revenue

Acting as Executor or Trustee of the deceased’s Will is an important and legally-binding role which must be taken seriously. If you are in any doubt as to the scope of the job, or which actions fall under your remit, please seek professional advice. We would be happy to help guide you through this often difficult and emotional time. We’ll do everything we can to make it as easy as possible for you.

Are you a shareholder? If so, you have responsibilities. In particular, you should make shareholder protection arrangements so control of the company is not disrupted in the event of your death.

Just like a Will, a shareholder protection arrangement is the only sure-fire way of ensuring your wishes are carried out in the event of your death. And, when those wishes concern the continuity of a private company, it’s important to get it right.

How can shares be protected after your death?

On the event of your death, those you leave behind may need to acquire your shareholding quickly and without fuss. Your Estate may need to have the ability to dispose of your shareholding at a good price, and without unwanted tax consequences.

Trust deeds

Proceeds of your life policy will be payable to surviving shareholders, so they can buy your shareholding.

Cross option agreements

Shareholders should have a cross option agreement in order to ensure that surviving shareholders can’t just keep the proceeds of the life insurance without purchasing your shares. The agreement can also ensure your Estate can not refuse to sell your shares.

Inheritance tax

If a company qualifies for business property relief, your Estate will not be charged Inheritance Tax on the value of your shares. Cross options should be carefully drafted and the correct type of Wills put in place to take advantage of the BPR.
We can advise on where to find the best protection products to help you manage the transition of company shares within your Estate. One option is a cross-life assurance policy; alternatively a trust could be put in place.

We will assess your unique situation before recommending the best direction to suit your needs.

If you are a shareholder in a private company, don’t leave it too late to arrange protection plans. A Will is not enough. We make it as simple and easy as possible to add to your existing Will or set up new protection arrangements. Talk to us to put your mind at rest.

You can listen to my latest podcast here. In the first podcast, “Why Have a Will?”,  I discussed the importance of a will for everyone. Have a listen if you missed it.

You can listen to my latest podcast here.

Did you know that everyone is entitled to transfer gifts (up to a certain limit) without incurring inheritance tax? The limit is called the Nil Rate Tax Band and, for this tax year (2010/11) it is £325,000.

The Chancellor stated in his Pre-Budget Report that the unused portion of a person’s Nil Rate Tax Band can be used by their partner or spouse on their death. So, in effect, the surviving partner’s Nil Rate Tax Band has now doubled in the event of their death. This new rule applies if the first partner died before the Chancellor passed the ruling, but the second partner must have died after the date (the Chancellor announced the rule on 9th October 2007).

The new rules also apply if someone has been widowed more than once, but the total Nil Rate Tax Band can not be increased by any more than 100%.

Be aware, though, that the uplift in Nil Rate Tax Band upon the death of the second partner is not automatic. It has to be claimed, so keep detailed records of the percentage of Nil Rate Tax Band used, so you can claim unused portions in the future. This should be taken into careful account when probate is carried out.

For more information about Nil Rate Tax Bands and other personal tax issues, ask us for confidential advice. We will be pleased to help with any matters relating to making a Will, lasting power of attorney and questions about probate.

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If you need Long Term Care, your hard-earned assets could fall into the hands of your Local Authority in order to pay for the care you need. There are ways to prevent this happening, and you can set these in motion now before it’s too late.

Protect your assets in your Will

When couples make their Wills, they can set out how they wish their assets to be distributed. Your own half share (including the family home) could be placed in trust for your children or other beneficiaries, rather than being passed to your spouse. This will effectively protect your assets, including the home, from being seized to pay for Long Term Care. A Protective Property Trust Will fulfils this exact purpose, enabling you to pass assets onto loved ones but ensuring your surviving spouse continues to benefits from the assets placed in the trust.

Protective Property Trust Wills

Protective Property Trust Wills can be challenged by Local Authorities, and it’s possible that this type of Will may not protect all of the family home. They can not, for example, protect assets if both you and your spouse go into Long Term Care, and can not be set up by single people.

Use of Lifetime Trusts to protect assets

An alternative is to place your assets in a Lifetime Trust, rendering them unavailable for use as payment for Long Term Care fees (6 months after being placed in the Trust). Unlike Protective Property Trust Wills, this is a good option for single people and for couples where both members of the partnership end up needing Long Term Care. With Lifetime Trusts, no probate is necessary on death, which saves time and money.

For simple, down to earth advice on protecting your assets against Long Term Care fees, get in touch with us. We will be happy to give you our best advice and can help you in making a Will, understanding what to do when someone dies and issues such as Lasting Power of Attorney in the UK.

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If you are a widow or widower who has remarried, you may be wondering if the Double Nil Rate Band still applies to you. The good news is that the Double Nil Rate Band can now be transferred between spouses (and civil partners), although this doesn’t increase the total amount a couple can give away. This remains at 2x£325,000, but the surviving partner can give away the full £650,000 upon their death (previously, rules stated that only the Single Nil Rate Band applied).

Watch out, though, because the extra allowance can be lost if your new partner dies before you, because you can only add an extra 100% of the Nil Rate Band to your own allowance.

How the Double Nil Rate Band applies to couples

You have remarried after being widowed

The £325,000 Nil Rate Band is carried over, but could be lost if your current marriage also ends in death, with your surviving partner inheriting everything.

Avoid losing the Nil Rate Band

Upon remarrying, both members of the couple should write Nil Rate Band Discretionary Wills. These will protect £975,000 (£325,000 from your previous spouse, your own £325,000 allowance and your new spouse’s £325,000 allowance) from inheritance tax.

If both you and your new spouse have previously been widowed, you can both protect up to 2x£325,000 from inheritance tax. But it’s important to remember that the uplift in the Nil Rate Band upon any second death is not automatic. It has to be claimed.

For tailored advice on Nil Rate Tax Bands upon remarriage, and other UK Will and inheritance tax related topics, talk to us. We can help you write a Will, understand the issues surrounding probate and lasting power of attorney in the UK. We will be happy to advise you based on your individual circumstances.

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You probably already know that setting up a trust protects your wealth from inheritance tax. However there are many other benefits to using trusts to pass on wealth. Here are some of them:

- retaining control of assets when passing them to adult children

- protecting assets, typically family wealth, for future generations

- protecting wealth: from the taxman, from legal challenges, from marriage breakdowns or children who may spend it too quickly!

- trusts can be used for tax-planning and can carry significant tax advantages

Did you know that trusts can be set up at various points during your lifetime? As well as making provision for someone, a trust can be set up to mark the marriage of a child or birth of a grandchild. You can also set up a trust as part of your Will.

One major benefit of a family trust is that the nominated trustee – the person who has control of the trust and its assets – can be placed under strict instructions through a legal document called the trust deed. This controls how, when and to whom the trust’s income is released. Trustees can be close friends, family or professionals.

Trusts for more than one child

Families don’t always set up individual trusts for separate children, but it can be done. Typically, a trust is created with a range of individuals, meaning that one child’s share can be held for others if circumstances change.

If a child loses their parents before they turn 18, a trust is created statutorily and they can access the money when they reach the age of 18. For this reason, having a trust as part of a Will created during an individual’s lifetime is a great idea as it means a degree of control will be retained even if parents’ wealth passes to young children or teenagers.

You’ve worked hard to earn your wealth and we think you should protect it.Talk to us about the best way to set up a family trust if you think it would be beneficial to you and your family.

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Family trusts are a great – and tax efficient – way for parents to retain control as they pass assets to grown-up children. Have you considered that a family trust might benefit you?

Trusts have their history in providing family wealth with protection: securing the safety of family assets for future generations whilst keeping them safe from the taxman, from legal challenges and from divorces. But they still have their place in today’s financial culture and can be very useful if set up to perform well for you.

Like any trust, a family trust is a legal arrangement (set up with the help of a legal advisor) where the trustees are made legally responsible for the assets in question. The trustees have a legal responsibility to carry out the wishes of the settlor – the person who put the assets into the trust. Sometimes, trustees are also required to make decisions about how the trust’s assets should be used. In any case, the assets are held “in trust” for the beneficiaries, protecting them and safeguarding the wishes of the settlor.

There are several types of UK family trusts and we can advise you on which is most suitable depending on your family’s circumstances. A trust can provide peace of mind if the person the assets pass to are not yet ready (or able) to look after them, perhaps in the instance of teenage beneficiaries or those who are infirm. Another benefit of setting up a family trust is that the legal arrangements ensures your wishes are carried out when your assets are passed on. Ask our advice about how a family trust can safeguard family money, investments or property. 

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