Placing your house into a Trust can offer several benefits, including minimising care costs, depending on your specific circumstances and goals.
The rules and regulations regarding care costs, Financial Assessments, and Trusts can change. It is therefore crucial to consult with a qualified professional.
Here are some potential advantages of putting your house into a Trust:
- Control and flexibility: With a Trust, you can control how your assets, including your house, are managed and distributed. You can provide specific instructions in a Letter of Wishes which does not form part of the formal Trust Deed, such as conditions for distributing the property, providing for minor beneficiaries, or addressing special needs of beneficiaries. Trusts can be designed to accommodate your unique preferences and circumstances and future changes within your family, offering flexibility that a Will may not provide.
- Asset Protection: Care cost regulations aim to prevent individuals from deliberately depriving themselves of assets to avoid care costs. The rules do however provide exemptions and timescales within which effective planning can be undertaken. It is important to ensure that any planning you undertake is done in good faith and not solely to circumvent care cost assessments. Seeking professional advice can help ensure compliance with the relevant regulations.
- Confirmation (Probate): One of the benefits of using a Trust can be to avoid the Confirmation process. This is called Probate in England. Confirmation is the legal process in Scotland of administering a deceased person's Estate, including the distribution of assets according to their Will or the intestate rules that govern Estates where no Will is left. By placing your house in a Trust, you can bypass Confirmation (Probate), allowing for a smoother and faster transfer of ownership to your intended beneficiaries.
Here are some of issues to consider before putting your house into Trust:
- Seek professional advice: Given the complexity of care cost planning and Trusts, it is essential to consult with a Solicitor who is well-versed in Scottish law. They can provide tailored advice based on your specific situation, help you understand the relevant regulations, and guide you through the process.
- Timing: Care cost planning through a Trust is subject to scrutiny and may be subject to a "look-back" period, although this is different from the 7-year rule applying to Inheritance Tax. This means that transferring assets into a Trust shortly before requiring care may not be effective in minimising costs. Starting the planning process well in advance is generally advisable, although there remain planning opportunities if it is left later.
- Trust Structure: The specific structure of the Trust is critical to ensure it aligns with your intentions now and into the future. Classes of beneficiaries can be chosen, such as children, grandchildren and any other Trusts set up (potentially to assist a beneficiary with Additional Support Needs). When the Trust should end is a consideration alongside who is to manage the Trust as Trustee.
It's important to note that the benefits and suitability of placing your house into a Trust may vary based on your individual circumstances and personal goals. Consulting with an experienced Estate planning Solicitor can provide you with tailored advice to determine if a Trust is the right option for you.
Inheritance Tax Planning
Minimising Inheritance Tax for individuals ensures that your assets (money, houses, land) built up over a lifetime can be passed on to the next generation.
You want to ensure that you are able to leave your estate to whom you wish, and a Will can also deliver opportunities to reduce Inheritance tax and care costs.
Power of Attorney
Having control to put in place authority for an individual(s) to manage your financial and welfare affairs when you are no longer able to manage yourself.