Question regarding Life Trusts vs Severance of Tenancy and Will Trust.
Situation: Clients who I was preparing a straightforward Will looking at Care home Fees, unfortunately, Mrs. passed as they procrastinated over the Wills.
Now he wants to get stuff in place but wants to protect the property.
I’ve not sold a Life Trust before but simply need to know (even having the training for it), with a Will Trust, deprivation and the seven year+ rule before it may be beneficial to them.
Is a Life Trust the same or is the PPR protected from day one with no shadow period or potential accusations of deprivation?
Trustees were appointed and ownership of the asset transferred to those trustees.
On day 2 the client doesn’t own the asset - the trustees do.
The client hasn’t received any value in return for the transfer.
I can’t see any conclusion other than that the client has deprived himself of the asset.
Was this deprivation undertaken to avoid contribution to care costs?
I think your post supplies the answer to that question.
I’m not aware of a ‘seven year rule’. My understanding, which might be incorrect, is that once a ‘tainted deprivation’ has been made it retains that status without limit of time.
Thank you, I’m just looking for a definitive answer - I’m sure you’re right but I need to know from someone that has done this and either succeed or failed. I know the council will challenge potentially forever but does it work or not? If it doesn’t I won’t promote it. There never seems to be a black and white answer.
I’ve done two of these in the past 20 years, both as the clients insisted despite providing advice on Deprivation of Assets. I don’t like them! The ‘7 year rule’ does not apply to Deprivation of Assets so in theory a Local Authority can go back as far as they like. It only applies to IHT, and if property would be a GRoB anyway.
You could do a Deed of Variation with a retrospective Severance of Tenancy for the deceased’s half share though this still constitutes a Deprivation. But it could be argued with the Local Authority that was the deceased’s intention before they died. But as always with these matters, I never predict, or offer much of a view on whether the Local Auth will investigate let alone succeed.
Put simply there is no black and white answer. And that’s what I say to clients, and if they proceed, I get them to sign and indemnity confirming my advice.
Last point, I often provide clients with an Age Concern Fact Sheet on Deprivation of Assets, which you will find on their website. I do this as its unrelated to my, or any other firm, estate planner etc.