A client forwarded to me some basic information on a lifetime property protection trust being hawked by a firm as an antidote to care fees. After putting the client in touch with a reputable solicitor I should have promptly deleted the material but then curiosity got the better of me. In the interests of friday fun thought I would bring the tax claims here as I was confused.
The claims are:
- Main residence placed into Trust. (Does not state who the beneficiaries are but as the settlor continues to live in the property the settlor has to be included).
- The transfer in does not create a tax charge. (No caveat re value being below nil rate band)
- There are no trust ten year charges.
- On death the property still forms part of your estate for IHT.
The only trust I can see all these steps working for is a bare trust as both a Discretionary and Life Interest would trigger a chargeable lifetime transfer and be relevent property. But are the local authority really so easily bamboozled by a bare trust arrangement given you are still legally beneficially entitled to the asset? The claim that as the Trustees now own the property it cannot form part of your assets for care fees assessments suggests this is not a bare trust as the Trustees in a bare trust are not legally beneficially entitled to the underlying assets. They are nothing more than caretakers. Am i missing something?