Asset Protection Trusts

Transferring property into an Asset Protection Trust has become increasingly popular over the years as people try to actively protect their assets and provide ease of administration for their loved ones.

Advantages of an Asset Protection Trust

It is important to note that if the property is transferred into the names of trustees, if you ever suffered from a temporary or permanent lack of capacity, the property can still be managed appropriately without the need for a lasting power of attorney or a court of protection order.

Transferring the property into an Asset Protection Trust also provides ease of administration to sell the property upon the death of a trustee meaning that a Grant of Probate would not be required to deal with the property, you would only need to provide a death certificate.

Once the property has been transferred into an asset protection trust, you will no longer be the outright owner of the property. This is where transferring your property outright to your children for example, differs from transferring your property into an asset protection trust.  If you transfer your property outright to your children, there are risks associated with this including the fact that the property is no longer owned by you and you do not have an automatic right to reside in the property, meaning your children could essentially make you leave the property. It will also be treated as your children’s asset in terms of divorce proceedings, means tested benefits, financial difficulties and bankruptcy. It also could have implications for your children in terms of Stamp Duty Land Tax, and Capital Gains Tax if they own more than one property.

If you transfer your property into an Asset Protection Trust, the property will not be considered as belonging to anyone as an ‘asset’ as no one owns a distinct share and therefore the property is protected in the event of divorce, bankruptcy and means tested benefits. A purchase as a trustee is treated as separate from a purchase by trustees in their personal capacity in terms of Stamp Duty Land Tax.

It is important to note that transferring your property into an asset protection trust does not make the property exempt from inheritance tax.

If would like to know more about Asset Protection Trusts and how to make one, then please get in touch to make a free, no-obligation appointment.