Family Protection Trust.
It appears that one of the main reasons why the producers of a Family Protection Trust are no longer about is because of their suggestion they could protect against care home fees or inheritance tax, which is simply not possible. You know the saying, if it is too good to be true, then it probably is.
Usually at huge cost, elaborate trusts were created in relation to the family home, with the intention that the asset was no longer owned and so could no longer be caught in any assessment for care home contributions or inheritance tax.
However, the effectiveness of these schemes are thwarted by Local Authorities, who see these trusts as a deliberate deprivation of capital in order to avoid paying care home fees and so assess you as if you still actually own the asset, and by HMRC’s ability to consider the former home owner has retained an interest in the property, despite the change in ownership. Furthermore, if a property is placed into a trust, the former home owner no longer has available the newly introduced Residence Nil Rate Band, which for a couple could currently provide an additional £300,000 they can leave before inheritance tax becomes an issue.
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