Estate Planning

Independent, qualified funeral directors based in Upton-upon-Severn and Pershore.

Winner of SME Midlands Enterprise Awards 2018

‘Worcestershire Funeral Director of the Year’


If you do not have a Will, you have no say over what happens to your assets when you die and this can cause difficulties for those you care about most.
Because of this, everyone should have a Will, this is particularly true if you:

  • Own property.
  • Are married.
  • Have entered a civil partnership.
  • Have a long-term partner.
  • have children or other dependents.
  • Or if you wish to leave something to someone who is not a close family member.

Our customers have told us that once they had made their Will they felt a huge sense of relief, knowing that in doing so they have legally recorded how they wanted their assets divided after death. Thus providing their family with the security they deserve.

Lasting Power of Attorney

If you are diagnosed with Dementia or Alzheimer’s disease, suffer stroke, or simply have an accident that renders you brain damaged and incapacitated you will no longer be deemed capable of making financial or health and welfare decisions for yourself. If this circumstance arises and you have not made any arrangements in advance for someone that you know and trust to make decisions on your behalf, then:

  • Bank Accounts in your sole name and joint accounts on which you are named will be frozen.
  • You will not be able to deal with the sale of your home.
  • Your family won’t be able to decide where you live.
  • A government department, the Office of the Public Guardian/Court of protection, may appoint a Solicitor or Social Services to manage your affairs. This person is called a Court Appointed Deputy.

Someone in your family may wish to apply to the Court of Protection to act as your Deputy. Achieving Deputy status can take up to 12 months and the costs can easily exceed £2,000 with on­ going annual audit fees of around £800 for each application that you make to t e Court! As a Court Appointed Deputy you will have restricted powers and you will have to refer back to the Court for many of the decisions that you need to make.

By creating a Lasting Power of Attorney (LPA) when you have mental capability and awareness, you can appoint people you trust (they are called “Attorneys”) to act on your behalf (you are known as the “Donor”) when you are no longer able to act for yourself at which time they can manage your affairs straight away. As Donor you can give wide ranging powers to your chosen Attorneys and aslong as they only ever act in your best interests they will not need any interact din with the Court of protection. The cost of this peace of mind is fraction of the cost of the alternative Deputy application.

Protective Property Trust & Lifetime Asset Trust

Have you considered what the effect might be on your savings and investments even your home, if you ever needed residential care later in life.

Most people assume that their assets will pass on to their children or other relatives in due course, yet this may not always be the case unless careful arrangements have been made to protect these assets from being taken to pay care home fees.

Trust Structure

A trust is an equitable obligation binding a person or persons, the Trustee(s), to deal with property over which they have control for the benefit of other persons, the Beneficiaries. The property can be any kind of real or personal property i.e. money, real estate, stocks, bonds, collections, business interests, personal possessions, automobiles, etc.

A Trust involves at least three people: the SETTLOR (the person who creates the trust, also known as the testator/donor), the TRUSTEE (who holds and manages the property for the benefit of the settlor and/ or others), and one or more BENEFICIARIES (who are entitled to the benefits). In some trusts, the Settlor is also a Trustee and a Beneficiary!

The settlor does not sell the assets to the trustee, but gifts them to the trust which receives the assets. The trustee agrees to manage the property in the way specified.

Putting property in trust usually transfers it from ownership by the Settlor, to the trustee who holds the property for him. From there onwards, the trustee has legal title to the trust property. To a certain extent, the settlor loses control of the asset, but with carefully chosen trustees, one of whom can be himself and/or his spouse, control can be continued.

For most purposes, the law looks at these assets as if they were now owned by the trustee. For example, many trusts have separate taxpayer identification numbers. But trustees are not really the owners of the property but a sort of nominee owner for the ultimate beneficiaries. The trust, rather like a limited company, has its own life and separate existence.

Trustees have a legal duty to use the property as provided in the trust agreement and permitted by law.

How can a Lifetime Asset Trust help me?

Everybody wants to protect their assets for their loved ones. Parents are motivated to provide for their children throughout their lives and want what is best for them. Many people will draft a Will hoping to ensure that the assets they have worked hard to acquire during their lifetime are passed on to their children and chosen beneficiaries after their death.

However, a Will can only control the assets that you own at the date of your death and if these are eroded during your lifetime, there will be little if anything for your beneficiaries to inherit.

Lifetime Asset Trusts are specifically designed to protect your assets for you during your Lifetime and give you the peace of mind that they can pass on securely and intact to your spouse, your children and their bloodline (or other named beneficiaries) after your death.

During your Lifetime

Once the Trust has been created, you can use it to ‘ring-fence’ your assets. Most people will protect their home and their savings, leaving some working capital in their current account for day to day living and bills. Income from savings protected within the Trust can be paid directly into your current account to supplement earnings or pensions.

Just like a safety deposit box, assets can be added and removed during your lifetime. If you have large expenses that cannot be met out of normal income like a new car, a holiday, or house repairs, the appropriate sum is transferred to your account from the Trust.

You are named as the ‘Principle Beneficiary’ and retain full control of the assets within the Trust while you are alive and have capacity. You are free to move home or release equity from it at any time.

As the former owner of the property settled into Trust, you have a guaranteed right of occupation in the property for the remainder of your life. The trustees, usually the children, cannot evict you in any circumstances.

You can direct the trustees to sell the property and to buy a new property of your choice. You can therefore move property or trade down. The trustees have no choice in the matter. Of course in the rare circumstance where the new property might be more expensive, the trustees can only be required to buy the new property if the additional capital needed is provided by the former owner.

The trust described above is equally applicable to married couples and to single owners. In fact, married couples using a Trust will have the additional advantage that if they do so at a time when one of them went into care, the home could in any event be disregarded due to the other spouse still living in it.

The Trust is fully reversible, so if you change your mind at any time in the future, we are able to return everything back to how it is now.

If you become mentally incapable

If you lose mental capacity, the Law states that you are no longer allowed to manage you own affairs. Assets held within the Trust will then be managed by your Trustees on your behalf. Your Trustees can effectively ‘stand in your shoes’ to make decisions on your behalf but these must be for your benefit. They are able to add or remove assets or use the income from the Trust to help you and improve the quality or your life. Assets held outside the Trust will fall under the control of the Courts. Creating a Lasting Power of Attorney (see separate guide on this subject) will enable the people you choose to manage the assets that you own outside of the Trust.

If you go into care
If you go into care, and you do not have a spouse or dependent relative living in your home, you will need to decide whether to sell it or to rent it out. If you have gone into care and have lost mental capacity, your Trustees will need to make this decision for you. If the property is sold, the proceeds will continue to be protected within the Trust and can be invested and you will normally receive the interest or income earned on the invested capital.

After your death
After your death, the Trust continues to work to protect your assets for your beneficiaries. The Trust can continue to hold the assets safely within it or pay them out to specified individuals or charities. The Trust becomes extremely flexible after your death and has the potential to continue protecting your family for 125 years from the day it was created. That means that all of the benefits described in this document can not only protect you and your children but can also protect your grandchildren and great grandchildren!

The benefits of a Lifetime Asset Trust

No Probate Fees or Delays
Probate is required on all estates with assets over £5,000, even when there is a Will.

Probate takes, on average, 6 months with a Will and 2 years withoutAssets are usually frozen on death until Probate is granted. A house owned by the deceased cannot be sold straight away.

The Lifetime Asset Trust offers the significant benefit that assets in the trust will not be subject to Probate on death. This means that, apart from the significant costs savings, the home can be sold or transferred by the trustees immediately after death with no Probate formalities at all. This is potentially a massive advantage. While the administration of an estate can often take a year or more and cost thousands of pounds, this can be avoided with the Trust and the assets protected by it can be distributed to your beneficiaries in a matter of days if desired.

If you have less than around £5,000 outside your Trust at the date of your death, many or all of the delays and costs typically associated with winding up an estate can normally be avoided as Probate can potentially be dispensed with completely.

A recent Which?™ Report comparing Probate fees gave the average rate of a High Street provider to administer an estate of 2.79% including vat and disbursements. This means that the cost for Probate for a £200,000 property would be £5,581.

The fees for setting up a Lifetime Asset Trust can usually be easily justified on Probate cost savings alone.

Potential Saving: Thousands of Pounds

No Claims on your Estate
Not all family circumstances are straightforward and the law entitles relatives, dependents, or other people for whom the deceased had taken responsibility up to death to go to court and claim ‘reasonable financial provision’. A claim against an estate can take years to defend, cost thousands in legal fees, and result in the loss of a large percentage of the estate. Even if the claim fails the legal fees and delays can cause major problems.

The Trust cannot be challenged on your death, so even if a claim is brought against your estate, this will only apply to any assets outside the Trust such as the working capital in your current account. If this is kept to a minimum, claims are normally quickly withdrawn.

Potential Saving: Tens of Thousands of Pounds

No Sideways Disinheritance
Many people are concerned about the effects of remarriage after first death. The Trust allows you to benefit your spouse without the risk of losing the assets to his or her new spouse or children.

The Trust allows you to ‘lend’ your assets to your spouse after your death. These assets can then be repaid to the Trust either on the death of your spouse or on some other specified event (such as remarriage) and will pass under the terms of your Trust to your children or other beneficiaries.

Assets that pass down to your children can be ‘ring-fenced’ for your grandchildren rather than pass sideways to your son-in-law or daughter-in-law who could then remarry and disinherit your bloodline.

Potential Saving: Entire Estate

No Court of Protection Control
As previously mentioned, you are no longer allowed to manage your own affairs if you become mentally incapable and a special court called the Court of Protection will take control of assets outside your Trust. This is to protect you from yourself and to prevent the unscrupulous from taking advantage of you.

The Trust allows you to choose the Trustees who can control your assets without the supervision of the Court. For most families, this allows common sense to prevail without the bureaucratic costs and delays normally experienced by those under the supervision of the Court.

Potential Saving: Thousands of Pounds

Protection from Bankruptcy
If you are in business, and would like to safeguard your personal assets from future unforeseen business debts, the Trust can keep them safe. Although this does not prevent you from being declared bankrupt it can avoid the assets held within the Trust being taken to satisfy them. This is particularly useful for those who can suffer financial loss at the hands of a third party through no fault of their own.

This can also apply to subsequent generations, preventing loss in the event that your children or grandchildren suffer financial difficulties. If you pass away at a time when one of your children is bankrupt, the Trust can hold the assets safe until they have been discharged.

Potential Saving: Entire Estate

Financial Protection from Relationship Failure
Many people are reluctant to enter into a new relationship, or to progress a relationship fearing the financial Consequences if the relationship fails. This is particularly true for those who have experienced a costly divorce or are widowed and want to protect their estate for their children.

By ring-fencing your assets with the Trust prior to cohabitation you can ensure that they are safe should the relationship breakdown in the future. This will also protect your children and grandchildren from losing their inheritance should their relationships fail in the future. The assets protected by the Trust cannot be taken into consideration in a divorce settlement.

Potential Saving: Tens of Thousands of Pounds

Protection for benefit dependent beneficiaries
Assets inherited by someone that is benefit dependent, will often result in a loss of those benefits. Ultimately the beneficiary is then the Government not your relative.

The Trust protects the assets so that your beneficiary will still qualify for State support. This may be a temporary situation such as unemployment or a more long-term condition such as a congenital birth defect. This is particularly important where the beneficiary has a condition that will prevent them from supporting themselves in the future.

The Trust can provide all of those extras not normally possible when relying on benefits.

Potential Saving: Entire Estate

Protection from Inheritance Tax
Assets held within the Trust will not form part of the taxable estate of your beneficiaries. This means that assets held in Trust for the benefit of your son or daughter will not be taxed on their death potentially saving your grandchildren tens of thousands in inheritance tax. Your grandchildren will inherit from your Trust and not from the estate of their parent.

Potential Saving: Tens of Thousands of Pounds

Protection from Care Fees
A side effect of the Trust is that assets correctly held within it cannot be taken to pay for your care. With care fees often costing thousands of pounds per month, many feel that it is unfair to work all their life only to have their home and savings taken away in the last few years.

The Trust offers effective protection from care fees provided that at the time the assets were protected it was not reasonably foreseeable that you would need to go into care. If you transfer assets into the Trust at a time when you are about to go into care, no harm is done and all of the other benefits of the Trust still apply but the Local Authority may be able to recover some or all of the cost of your care from your Trust.

If you are already in care or about to go into care we can give you specific advice tailored to your circumstances.

Potential Saving: Tens of Thousands of Pounds

How likely is it that I will need to pay for long term care?

Statistics show that 1 in 3 women and 1 in 4 men go into care. If you have any assets above £14,250 (2010/2011), you will start paying for your care from your own funds.

Average care home fees cost between £30K and £50K per year. You or your family may have to sell your home to pay for care.

Those who cannot afford to pay privately for care must ask the local authority for full or partial funding towards the costs. The resident has free choice of home, subject only to the fee level quoted, which is usually within the funding arrangements available to the local authority.

Both income and capital resources are assessed.

If you have capital assets above £23,250 no contribution will be made by the local authority.
Below £14,250 a full contribution will be made by the local authority.
Between £23,250 and £14,250 there is a partial contribution made by the local authority.

Virtually all income is assessable. The principal exception relates to part of an occupational pension in certain circumstances. A small amount of income (currently about £23 per week) is not assessed, amounting to little more than pocket money. This is literally intended to cover toiletries, hairdresser etc.

The Home
The starting position is that the home counts as capital for financial assessment purposes. The value of the home, or an interest in it, is taken account of as a capital asset. It comes into the reckoning for means testing at its market value, less 10% (assumed costs of sale) and less any mortgage liability. Once sold, the home simply comes in as cash.

The home can be disregarded under certain circumstances:
During the first 12 weeks of care.
During temporary or respite care.
If it is occupied by a husband, wife or unmarried partner.
If it is occupied by a close relative over the age of 60 (or under the age of 16).
If it is occupied by a relative under the age of 60 who is disabled.

The local authority may, at its discretion, ignore the value of the house if it is the permanent home of a carer or in certain other limited situations. However, prudence would advise against relying in any way on the local authority’s discretion.

In 2010, figures obtained by the Liberal Democrats under the freedom of information act revealed that nearly 50,000 homes are forcibly sold each year to pay for the cost of long-term care.

Almost one third (31 per cent) of the 155,000 self-funders who are currently in residential care were forced to sell their homes to cover the costs.

The figures also reveal that since 2005 the number of people in care who have been forced to sell their homes has increased by nearly a quarter (23 per cent) – an extra 9,000 people.

Local authorities around the country are experiencing severe financial constraints in funding care. This in turn leads to more aggressive assessment and the failure of steps that are taken too late.

Parents are also seeing nest eggs built up as intended inheritances for their children decimated over short periods once in care. With advance planning this need not be the case.

Can I give my home away?

Many older people are actively seeking ways of preserving their estate to pass it on to the next generation and to avoid it being decimated by care home fees.

Giving the home away to the children has in the past been seen as the solution. However, it is not to be recommended. The risks of putting all or part of your home in the names of your children are immense:
Divorce – the home may be the subject of the child’s divorce settlement.Bankruptcy – the child may go bankrupt and the house become available to the child’s trustee in bankruptcy.
Pre-decease – if the child dies before the parent, the ownership of the home may go off in the wrong direction (e.g. son or daughter in law).
Sale – the house will be the children’s to sell.
Finance – a child could attempt to raise finance on the house.
Pressure – children notoriously consider the parent to be ready to enter care long before the parent himself or herself.

The Lifetime Asset Trust strategy described by this document avoids all of these risks.

There is also the misconception that if you give the home away at least 6 months before going into care, the local authority cannot touch it. There is a so-called “six-month rule” in the legislation but this is a rule applicable to a specific circumstance and cannot be relied upon. In the real world, many local authorities have rules of thumb; some will only look back over one or two years but others may look back over a much longer period. “Deliberate deprivation” is a real concept that can make things more difficult.

Cash strapped local authorities are cracking down on people who they think are trying to avoid paying care fees and they are becoming increasingly sceptical about people saying gifts were made due to the “natural love and affection” for their children.


Local authorities have a number of remedies available to them to counter planning in certain circumstances. The primary remedy available to local authorities is “deliberate deprivation”. A local authority may treat a resident as possessing the home, or an interest in the home, if it can show that the resident deprived himself or herself of the home for the purposes of decreasing the amount that he or she may be liable to pay for his or her care accommodation, i.e. the local authority can still treat the resident as owning the home and can financially assess the resident accordingly. This is known as ‘notional capital’.

Anyone considering using this strategy can avoid the appropriate deprivation rule in one of the two following ways:

A. Through the passage of time after the transfer into trust. The time elapsed between putting the home in trust and entry into care may be of such a length that the local authority realistically cannot show deliberate deprivation. There is no set period or no period in respect of which a guarantee could be given.

B. Putting the home in trust at a time when entry into care is simply not an issue, is not on the horizon and is not currently something reasonably foreseeable as something that might happen. The planning relies on this scenario; that the home is put in trust at a time when entry into care, and the financial consequences which might follow, is simply the usual distant worry that most homeowners have at the back of their mind, even though still only a minority of the population end up in care.

There is much misinformation in circulation of various safe time limits. A typical example of the confusion is that a gift of the home will be safe from assessment by the local authority from 6 months, 1 year, 2 years, 3 years, even up to 7 years (the latter being very often confused with the relevant IHT risk period) prior to entry into care.

The most dangerous time limit suggested by various advisors is 6 months, which is presumably drawn from the legislation. However, anyone relying on that time limit is taking a very big risk in presuming this time limit will be acceptable to the local authority.

The right answer is to make the necessary arrangements at a point well in advance. If planning is done well enough in advance, then the various remedies and anti-avoidance provisions available to the local authority can be avoided. The question is simply whether the measures taken ensure that assets are not brought within the financial assessment on entry into care.

For married couples, until the first death the family home carries a “disregard” status, therefore any planning Undertaken while both spouses are alive is even more likely to be secure from local authority attack. If a husband and wife undertake long term planning while both are alive, their planning should usually be successful.

Inheritance Tax (IHT) and Capital Gains Tax (CGT)

The trust strategy is entirely neutral for IHT and CGT. It neither improves, nor worsens the tax position of the Settlors.

CGT – there is no CGT to pay when the family home is put into the trust (due to principal residence relief) and there is no CGT to pay when the home is sold by the trustees after entry into care or by the children after the parents’ deaths (due to the trust version of principal residence relief).
IHT – in the trust the home remains in the settler’s estate for IHT. For married couples using the trust strategy, the strategy is compatible with the use of two IHT nil rate bands (currently 2 X £325,000 = £650,000) for IHT planning.

Professional Advice

This document is for general guidance and information only. Specific situations require specific advice and this guide is no substitute for the appropriate advice.

For all or any advice on any estate planning services please call us on 01684 594971 and a specialist will arrange a time to discuss this with you.

24 hour personal attention from Matthew, Mark, Lee or Tracey.