Lifetime Trust for Client with learning Difficulties

Hi Everyone,
I have a client in his 50’s, single, own home, no mortgage, few savings. He has a “good” brother who’s trying to help him and a “bad” brother who has already tried to get him out if his home by trying to get him in a home and having him committed. The client is quite easily lead.

His good brother wrote him a will but now wants a proper one setup (which I’ve done) but because of the issue with “bad” brother, asked a solicitor the best way to protect his brothers property who suggested a simple lifetime trust putting the property into trust now.

Question is what would be the ideal “simple” trust to do that? I think the Asset Allocation Trust looking after the NRB//RNRB would be over the top so I wonder what the simplest/cheapest way of doing it would be?

Any suggestions?

Cheers Chris

What’s an Asset Allocation Trust?

I’d be extremely cautious about putting a main residence into a lifetime trust for the usual concerns over deliberate deprivation of assets. Presumably it’d be settlor-interested as well, even if you go down the discretionary trust route.

Hi EddieBell
Therein lies the problem. Asset Allocation Trust can come under many names depending on who you ask.
To me, its taking the PPR and conveyancing to the Trust so the Trustees own it during lifetime and then it passes into the Will on death into potentially a discretionary trust. The client would retain his interest in the PPR.
The effect I’m looking for is simply to stop one brother any access to the property as he would not be a beneficiary of the trust.
The client isn’t bothered about RNRB or the other side effects of the Trust, simply keeping the brother away from his assets. We’re not trying to avoid deprivation as care fees haven’t been discussed at all.

Hi,

I think you mean assest protection trust, which is a common marketng term?

These are sold under the premise they avoid care fees, which is true if executed when in good health and no immediate care is forseen. The depreviation of assests rules apply.

The transfer would create an immediate liability to IHT - 20% subject to any NRB/TNRB available. RNRB is not available. GWROB would apply, so the property would remain in the settlors estate for IHT, PRR is available.

Id be inclined to question the clients capacity - that said - who are they protecting assests from and why?

Richard Bishop
PFEP

The client has inherited the property from his father and on HMLR still resides in his father name. This can be resolved. Although the client has mild learning difficulties, his elder brother looks after everything out of his scope. The elder brother was advised by his solicitor to place the property in trust mainly to keep it away from the younger brother who is trying to get him out and sell the property. I’m not sure of the Father’s Will distribution, but the solicitor is. Essentially the Asset Allocation Trust I intend to use puts the house in a lifetime trust with no entry, exit or periodic charges. As the clients estate will be way under his NRB, there should be no IHT or CGT to pay for the beneficiary. At least that’s how I understand it.

Richard you mention that the NRB/TNRB would be available but I believe that only the NRB is available in lifetime transfers.

Patrick Moroney