No one knows what the future may bring so it’s important that you plan ahead. Our specialist asset management solicitors can advise on the best way to ensure all your assets are properly protected.
We can advise on:
It’s very common to consider making gifts to family members to ensure the assets are kept in the family. In particular, many consider giving away their property, or a share in it, to children during their lifetime or in their will.
We would not usually recommend that you transfer your assets without carefully considering your financial security as once a gift is made there is no turning back.
In particular, we would not suggest that you transfer the ownership of your property outright to someone else while you or your partner continues to live there. Problems may arise should one of the recipients of the gift suffer from financial difficulty, or a divorce, or a family disagreement. It is extremely important to take the proper legal advice before making such a transfer.
It is possible to set up a trust where you can transfer your assets to people (known as trustees) who would then hold those assets according to terms agreed between you.
The asset most commonly transferred is the property. The terms of the trust would usually stipulate that, although the property is held for your children, the children will not be able to sell the property whilst certain people continue to live there.
It is even possible to stipulate that the property can be sold at any time with a view to buying a more suitable replacement property which would also then be held on the same terms.
By transferring a property, or other assets, into a trust it is possible to offer a degree of protection to the equity in the property for the benefit of children.
As there can be tax implications in setting up these arrangements, it is essential to take advice before proceeding.
Also see: personal tax advice.
If you need long term care in the future but fall below the required criteria for the NHS to award you fully funded care (known as Continuing Health Care) then your assets will be assessed to see if you are able to fund your own care.
If you have given assets to your children, or you have transferred assets into a family trust, then the value of those assets should not be included in your financial assessment.
However, if the Local Authority can show that the assets were transferred to avoid paying for care then it is possible for them to still include the value of those assets in your financial assessment as notional capital. It may even be possible for the Local Authority to send the bill for care to the family member who has received the transferred assets. It is therefore important to take advice on the risks before making such a transfer.
Also see: nursing care.
If you feel uncomfortable with transferring your assets during your lifetime but you still want to offer them some protection in the future then you should consider reviewing your will.
The majority of people usually want to leave their assets to their partner on their death. By doing this you place the entirety of your assets at risk should that partner have financial difficulties, if they enter into another relationship, or they need care in the future.
If you want to be certain that your assets will pass down to specific individuals in the future (i.e. your children) then you may wish to consider leaving your assets to them on first death or to set up a family trust in your will.
There can be risks involved in making an outright gift to family members as, in the case of your will; this could leave your partner financially vulnerable. It could also result in your partner (or a third party on their behalf) making a claim against your estate for further financial provision. As a result we would usually recommend a family trust as this helps to reduce these risks.
There are different types of trusts that can be used depending on the value of your assets and whether you are married or in a civil partnership. However, the overall aim of each of the trusts is to provide your partner with a right to enjoy the assets but to protect the capital from a claim by a third party. This would include a right to live in the family home and to buy a replacement property if it is needed.
Also see: write a will.
It is important to review any savings and investments to ensure that they are in the best place to produce the capital growth or income to assist you to meet your financial commitments in the future.
The Hugh James Financial Services team are independent professionals who will give you impartial, best value advice.
Also see: financial services.