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The Advantages of Placing Your Home in Lifetime Trusts

a local authority representative trying to assess the house for care costs

Owning a home in the United Kingdom is not only a substantial financial investment but also a crucial element in securing your family's future. To navigate the complexities of UK law and ensure optimal asset protection, individuals should consider settling their homes into a lifetime trust. In this blog, we will explore the unique benefits of adopting this strategy under UK law.

1. Inheritance Tax Planning:

In the UK, inheritance tax (IHT) can significantly impact the wealth passed on

your son with all the extra money he will save on IHT

to your heirs. Placing your home into a lifetime trust can be a strategic move to mitigate IHT liabilities. They might not be able to help you with your own IHT bill, because if you continue to benefit from the property by living in it or earning rental income it would be deemed a gift with reservation of benefit. But what it will do it keep it out of your beneficiaries estate when their time comes saving IHT being paid generationally.

2. Probate Efficiency:

The probate process in the UK can be time-consuming and costly. According to as of writing this blog the average price of a house in the South of England is £530,000. Typically probate costs vary between 2-5% + VAT of the entire estate. So based on the average house price in the South of England it could be between £12,720 and £31,800. Settling your home into a lifetime trust allows for a more efficient transfer of ownership, helping your beneficiaries avoid unnecessary delays and expenses associated with probate. This is particularly relevant for those who wish to streamline the inheritance process and ensure their loved ones promptly receive the benefits of their estate.

3. Asset Protection and Care Costs:

a woman in a care home after having to sell her house to pay for it

Lifetime trusts can offer protection against potential care costs in later life. In the UK, if you require long-term care and own a property, its value may be considered when assessing your ability to fund care. Placing your home in a lifetime trust can help protect it from being used to cover care expenses, allowing you to pass it on to your heirs intact. How ever take note that this should be seen as more of a by-product of the other benefits because it isn't always a 100% effective method to protect your home from care costs. For example, if there is a foreseeable need for care when you arrange a life time trust it could be deemed as a deprivation of assets and still be taken in to account.

4. Flexibility in Estate Planning:

UK law provides a level of flexibility in estate planning through lifetime trusts. You can specify how you want your property managed during your lifetime and establish clear instructions for its distribution after your passing. This flexibility allows you to tailor your estate plan to your family's unique needs and circumstances.

5. Confidentiality:

UK law allows for greater confidentiality with lifetime trusts compared to wills. While the details of a will become public during probate, a lifetime trust provides a more discreet way of passing on assets, maintaining the privacy of your financial affairs.

6. Proper Advice and Compliance:

trusts at a trustee meeting making sure the trust is run properly

Given the intricacies of UK law, seeking professional advice is crucial when establishing a lifetime trust. Compliance with relevant regulations is essential to ensure the trust's effectiveness and the realisation of its associated benefits. Engaging with a professional well-versed in UK estate planning can guide you through the process and help you make informed decisions.

Settling your home into a lifetime trust offers a range of legal and financial advantages, including inheritance tax planning, efficient probate management, and protection against care costs. As the legal landscape evolves, staying informed and seeking professional advice tailored to UK law is key to making sound decisions that safeguard your legacy and provide for your family's future.

If you’re looking to write your will, lasting power of attorney or want to learn more about Lifetime Trusts book an appointment with Joshua Young. I am A Will Writer covering Farnborough, Basingstoke, Camberley, Aldershot and the surrounding areas.


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