The assumption that trusts are only useful for financial planning for the wealthy should be revisited by people looking to reduce their exposure to nursing home fees says Adams & Remers LLP.
Lisa Gibbins, solicitor at Adams & Remers comments: “Whilst most people probably associate trusts with the wealthy it is also beneficial for those with more modest assets to consider leaving their estates in trust when they die. This will reduce the amount that will be assessable for the purposes care home funding by the Local Authority, if required by the survivor.”
A married couple can each prepare wills leaving their assets into trust, so that the trust owns half of their estates, and the surviving spouse owns the other half. At a later date, if the survivor needs to go into a nursing home, the local authority can only assess the survivor’s share of the estate when considering whether he or she should fund their own care. Once the survivor has used up all but £23,250 of their own assets to pay for care, the Local Authority will assist with paying fees.
The assets in the trust are ring-fenced for your choice of beneficiaries, and although they can be accessed by the survivor to pay for their fees if this is necessary, the Local Authority cannot count to the funds in trust when determining whether they have more than £23,250.
Lisa Gibbins continues: “The advantages of using a trust in this way really benefits those who may have done little about their financial or will planning as they fall under the Inheritance Tax threshold, but Inheritance Tax isn’t the only reason for setting up a trust or issue that people should plan for, as there is a risk that later in life their estate may be swallowed up by the cost of care home fees”.
Lisa Gibbins concludes: “It is worth seeking professional advice, whatever the size of your estate as there are many benefits to early financial planning which will help leave a nest egg for the next generation.”