Asset Protection Trusts & Family Asset Protection Trusts Heald Solicitors are experts in drafting Trusts

Although an APT can be a powerful tool for protecting wealth, it must be structured and used carefully to avoid being seen as an attempt to defraud creditors which could be deemed to be a Fraudulent Transfer known as a “Deliberate Deprivation of Assets”. A trust cannot be created solely to protect assets from other future obligations too, and local authorities may challenge certain asset transfers, particularly if they are made within certain timeframes with the intent of avoiding paying care home fees. In certain cases, trusts can be helpful for beneficiaries who need guidance in managing wealth, such as those with limited financial capacity or who may be at risk of mismanaging funds.

At Heald Solicitors, we specialise in the creation and management of Asset Protection Trusts and Family Asset Protection Trusts. Our expert team can assess your individual situation, offering tailored advice to protect your estate and ensure that your assets are passed down according to your wishes.

How Can an Asset Protection Trust Benefit Your Estate?

An Asset Protection Trust (APT) can be a key strategy in securing the future of your estate, helping you manage your assets, protect them from some potential future creditors, and potentially pass them on to your heirs in a tax-efficient manner depending on certain criteria being met. Here’s how an APT can benefit your estate:

Preserves Wealth for Future Generations

If you want to ensure that your assets are passed down to your heirs without the risk of mismanagement or disputes, an APT can be a valuable tool. By creating a trust, you can maintain control over how and when your heirs access the assets. This enables you to stipulate conditions, such as age restrictions or specific milestones, before heirs can receive their inheritance. This ensures that wealth is preserved for future generations in a responsible and managed way.

Continuity of Business Interests

For business owners, an Asset Protection Trust can also provide continuity in the event of death or incapacity. If you or your partner are involved in a business, an APT can ensure that business assets and interests are protected, providing financial stability for both the business and the heirs.

Flexibility and Customisation

APTs are highly adaptable and can be designed to meet your unique needs. Whether you wish to protect personal wealth, secure a family business, or ensure that your loved ones are provided for after your death, an Asset Protection Trust can be tailored to fit your specific goals and concerns.

Considerations Regarding Care Fees

While an Asset Protection Trust can be a useful tool for protecting assets from creditors and facilitating the transfer of wealth, there are certain limitations when it comes to avoiding care home fees.

Deprivation of Assets

If assets are transferred into a trust to deliberately avoid paying care home fees, this can be considered “deliberate deprivation of assets.” Local authorities have the power to review such transfers and treat the assets as if they still belong to you. This could result in a shortfall in funds for your care or cause financial hardship for your family.

Look-Back Period

Local authorities may investigate any asset transfers made within a certain time frame before a care fee assessment. The look-back period can range from 6 months to 5 years, depending on the jurisdiction, and transfers made within this period may be scrutinised if they appear to have been made with the intent of avoiding care fees.

Trust Income

Even if assets are protected within an APT, the income generated by those assets (such as rental income or dividends) may still be considered as income for care fee assessments. If you benefit from the income of the trust, this could be taken into account when calculating your ability to pay care fees.

Timing of Trust Creation

Creating an Asset Protection Trust shortly before the need for care is likely to arise can raise red flags. If the authorities perceive the timing of the trust as an attempt to shield assets from care fees, they may challenge the trust or reverse the transaction.

Ask Our Experts For Advice On Asset Protection Trusts

Creating an Asset Protection Trust is a complex decision that requires careful consideration of your goals, tax implications, and potential legal challenges. It’s essential to seek expert legal advice to ensure that the trust is set up correctly and in accordance with your wishes.

At Heald Solicitors, we specialise in the set-up and management of Asset Protection Trusts and Family Asset Protection Trusts. Our team can guide you through the entire process, offering personalised advice and solutions that meet your needs.

Although we are based in Milton Keynes, we work with clients throughout England and Wales and offer remote consultations, ensuring you receive expert advice wherever you are.

If you’d like to discuss how an Asset Protection Trust could benefit your family and estate, or if you need guidance on trust-related matters, contact our Asset Protection Trust experts within our Private Client team today on 01908 66277.