Making an Asset Protection Trust claim
Negligence solicitor, Emma Slade, looks at making an Asset Protection Trust claim.
‘Asset Protection Trusts’ have increased in popularity in recent years. People are attracted to these trusts as a means of preventing assets from being used to fund care fees, or limiting liability for inheritance tax.
It normally involves the individual transferring their home, saving or investments into a trust. The principle behind the trust is that if the asset is no longer owed by the individual then it cannot be taken into consideration when, for instance, determining a liability to pay care fees at some future date.
However, while this may sound like a good idea, there are practical problems associated with Asset Protection Trusts.
For instance, local authorities might challenge the legitimacy of the trust and charge care fees in any event on the basis that the creation of the Asset Protection Trust amounted to a deliberate deprivation of capital.
The tax position is also complicated. Transferring assets into trust will be a ‘lifetime chargeable transfer’ for inheritance tax purposes, as well as a chargeable disposal for capital gains tax. This can give rise to a tax bill, both now and in the future.
Furthermore, if the individual continues to live in a property after it was ‘transferred’ then unless they pay a full market rent for the privilege, then the asset will be regarded as remaining in their estate for inheritance tax purposes. Furthermore, their estate will lose the right to claim the valuable residential nil rate band.
There is also the issue of control. If a genuine attempt is made to transfer assets to a trust over which the individual has absolutely no control, then they will lose any right to have a say about how those assets are dealt with. This could result in them losing their home or savings if the recipient chooses not to honour any agreement with them. They could also lose out if the recipient gets divorced, becomes bankrupt or passes away. There might also be further adverse tax consequences to deal with.
Where someone suffers financial loss as a result of poor advice then they may wish to consider taking legal action. We can assist with an Asset Protection Trust claim where there is clear and verifiable financial loss exceeding £25,000.
Subject to the value of the claim we can often work on a no win, no fee basis.
So if you have suffered losses in excess of £25,000 and you would like to find out where you stand on making an Asset Protection Trust claim, and how your case could be funded, contact our free legal helpline.
Submit details of your case by email to [email protected] or call us on 0333 888 0403.
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