Asset Protection Trusts Can Be Interpreted As Deliberate Deprivation

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Care Fees and Deliberate Deprivation

Beware – DWP Can Recover Benefit Overpayments From A Person’s Estate

The average annual cost of nursing care is over £40,000. So schemes that aim to avoid you having to sell your home to fund care fees, are big business. But be careful, if you take this route, you could be accused of deliberate deprivation.

Funding Care

If you or your loved one reaches the point of needing residential or nursing care, a financial assessment will be carried out by your local authority. They will need a full list of assets. This includes your property, investments, cash and your income at the point you enter care. You will only qualify for financial help from your local authority if your assets are worth less than £23,250 (in England).

Understandably, elderly people fear having to sell their home. They prefer to pass it on to their children. So, schemes that will put your house in trust in a bid to keep it out of the local authority’s clutches, are very tempting.

Unregulated Practice

Anxiety over the cost of care remains at the top of everyone’s list. Consequently, marketing these ‘products’ known mostly as Asset Protection Trusts, Family Protection Trusts or Estate Preservation Trusts, continues to grow. But, be warned. Some providers are not legally qualified, invariably employ high-pressure tactics and often charge high sign-up fees.

Indeed, a group of eight unqualified (and unscrupulous) so-called lawyers were sentenced for fraudulent trading, scamming over £500,000 in up-front fees from elderly clients in return for bogus asset protection trusts. Read more.

Asset Trusts – Too Good To Be True?

So, what’s the rub? Providers claim that by ring-fencing your estate in an “Asset Protection Trust” this shelters the property from being included when a local authority determines how much they should contribute to their care fees.

It’s true, an Asset Protection Trust will put your home in a trust for someone else. However, if the main reason for signing over your property is to avoid paying for care, then the local authority can (and is likely to) challenge it as “deliberate deprivation”.

Deliberate Deprivation

It’s fair to say that when Local Authorities make your pre-care assessment, they’re all too aware of common avoidance tactics. When they find out your property has been transferred, they will definitely look closely at the motivation behind it. If it’s obvious that you are trying to protect your house in the avoidance of paying care home fees, then it will more than likely be deemed to be a clear deprivation of assets. This is not allowed.

Getting It Right

Of course, not all disposals of assets are necessarily deliberate deprivation. The issue is basically about intention.

If you or your loved one is considering gifting any assets, particularly transfer of a property, you should seek legal advice to make sure it’s done properly. Please contact us, we’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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