There are many organisations selling Asset Protection Trusts, usually suggesting they are a means to protect the house from having to be sold to fund care home fees.
Many of these schemes mean that you take your name off the deeds to the house and the house is then owned by a Discretionary Trust.
With the emphasis being on saving on care home fees the impact of Inheritance Tax is often forgotten.
If you own your own home at the date of your death and you leave it to your children then as well as your usual nil rate band that passes Inheritance Tax free (currently £325,000 if you have not made any lifetime gifts) a further £175,000 can also pass Inheritance Tax free. This is known as the residence nil rate band. However, if the property is owned by a Trust at the date of your death this additional £175,000 tax free allowance is not available. If you are given a glossy presentation and think that paying large fees to use a Trust with what looks like a promise to save money from being spent on care home fees to protect your children’s inheritance then please take care before you sign up.
At Belcher Addison we have experienced solicitors who deal with all aspects of Inheritance Tax planning and are also well versed in the rules surrounding the liability to fund care and will be able to give you professional and unbiased advice.