With the cost of residential and nursing home care rising, many people are looking to protect the assets they view as their children’s rightful inheritance. You can take steps now to protect such assets from future assessment by creating a flexible trust.
How does a flexible trust work?
- Your right to occupy the main property is protected
- You can still move property if needed, for example to downsize
- You have a right to receive income and capital from the trust
- The children have no call on the capital or income during Mum and Dad’s lifetime without their approval
- There is no benefit or disadvantage for inheritance tax
- Capital gains tax relief will still apply on sale of the property
- Property and money or other assets can be placed into the trust
Isn’t it just easier to give our property to our children now? There are many reasons why this isn’t such a good idea;
- Divorce of one of the children would result in the property forming part of the financial settlement
- Death of one of the children might mean their interest in the property passes to a son or daughter in law
- Bankruptcy of one of the children could leave the property at the mercy of creditors
- The children may decide they want the money sooner and force you to move into residential accommodation
- There are tax implications for family members. Unless they occupy the property as their main residence capital gains tax may apply
- Lack of security – there is no protection to secure your right to occupy the property
- Mortgage default if the children decide to raise money against the property.
A flexible trust leaves you in control, download our fact sheet for more information or contact us.
