Protecting Assets - Case Studies

Long Term Care Fees -"Protecting Your Assets" 

It's one thing reading the facts  - but how do these arrangements actually work in real life? The following case studies can possibly illustrate this better.

 Case Study 1

Background

Mrs J contacted us as she had heard that if she required care in the future, her home could be sold to fund it. Knowing that she and her late husband had worked hard all their lives to own their own home, Mrs J felt very strongly that it should pass to her children and should not be sold to fund her care.

The Facts

Mrs J set up a Lifetime Property Protection Trust to ring-fence her most valuable possession in trust for her children. The trust arrangement allowed Mrs J to continue living in the property, and even provided the flexibility for her to sell and purchase a different property. There were many benefits to the Lifetime Property Protection Trust, including shielding the property from the threat of being sold to fund long term care in the future. Mrs J latterly entered long term care some years later. Since the house was put into the trust at the correct time the house was exempt from care costs.

Lessons

1. If assets are put into a Trust at the correct time then they will be protected.

2. If you leave it too late the assets will not be protected.

 Case Study 2

Background

Mr and Mrs P were in their nineties and were becoming increasingly concerned about what would

happen should their health fail and they were to require long term care. Mr and Mrs P expected their care would be provided for free as they had always paid their taxes, until a little bit of research showed them this wasn't the case. Mr and Mrs P contacted us, as experts in Inheritance Planning and Wealth Protection, for help.

The Facts

We helped Mr and Mrs P establish Protective Property Trusts within their Wills. Mr P unfortunately passed away soon after leaving Mrs P living alone in the property. When Mr P passed away his share of the house was held in trust for their children but the trust arrangement allowed Mrs P a full lifetime interest in the property - this meant she could sell the house, downsize, invest equity released from the property and do just about anything else she would be able to do if she owned it outright. However, there was one important difference - when Mrs P latterly required care, the half of the home held in trust could not be used to fund it. It was therefore protected and eventually passed to the children.

Lessons

1. Never assume that it is too late to plan and protect what you have worked hard for.

2. There are different methods of protecting your assets, depending on your personal situation.

Case Study 3

Background

Mrs D owned her house with a small mortgage on it. Her son and daughter were concerned about care costs as Mrs D was elderly and they knew their inheritance could be used to fund her care. We visited Mrs D, her son and her daughter at home to discuss the situation.

The Facts

We set up a Lifetime Property Protection Trust but the mortgage needed to be cleared first. The son and daughter put up the funds to pay off the mortgage as they knew this was the best way to protect their inheritance. Mrs D later went into care and her property was held safely in the trust and was protected. The children decided to rent the property out to receive an income that could be used to buy the extras for their mother that ensured she had a good quality of life in her final years - this may not have been possible if the house was sold to fund her care. When Mrs D passed away the property was sold and the son and daughter received their inheritance.

Lessons

1. It pays to get advice form the right people. It can cost you dearly if you don't.

2. If there is a mortgage over the property it is always much quicker and easier if the mortgage can be paid off. Anyone who puts up the funds to pay off the mortgage has total protection via a security agreed with the Trustees.

3. Having a Trust does not restrict the care you receive it just means you can obtain maximum Local Authority funding ensuring your capital can be used to top up the fees, if you wish, allowing the best possible choice of care homes.

4. The Trust is for the benefit of the parent until they die and then for the benefit of the children.

Summary

You may or may not perceive yourself to be wealthy, but if your total estate is valued at more than £23,250 (in England) you will be required to fund your own long term care if you require it in the future. Careful planning can help you protect what you have worked hard for, but it is important you act as early as possible....................... but never assume it is too late.

Case Studies are provided for illustrative purposes by Collective Legal Solutions.