Probate Costs and Administration
Probate is the legal process of administering the estate of someone who has passed away. It can be expensive and time-consuming, often taking 9-12 months to complete. Most people will use their bank or solicitor to help, who on average charge 3% of the value of the estate to carry out the work. For any assets you hold in in trust, there is NO probate. Priced at a fixed fee, a Family Protection Trust offers a significant financial saving, as well as saving your family the burden of the stress and administration of the probate process at what will already be a very difficult time for them. Assets held in trust are usually transferred to the beneficiaries within 28 days of the death.
Children inheriting at the wrong time
Surprisingly, it might not always be convenient for your loved ones to inherit at the time that they do. If, for example, they are in the process of a divorce, their inheritance could form part of the divorce settlement. If they are receiving benefits, the inheritance could cause their benefits to be lost or reduced.
If you or your partner dies and the surviving partner remarries, the inheritance can pass to another family, leaving out your children. This is known as sideways disinheritance, as explained in the diagram below. Assets in a trust are protected from sideways disinheritance so you can have peace of mind that your assets will go to those you intend.
Claims on the estate
Families can be complicated and, on occasion, parents choose to leave a child out of their Will. By law, that child has a right to contest the Will and make a claim on the estate, which more often than not they are successful in doing. It is considerably more difficult to contest a Trust, making it far less likely that your assets will be passed to a family member that you do not intend.
Currently, anyone with assets above £23,250 may not receive state help with Care Costs, meaning that many families would have to sell their home to fund Care.
- There is no legal way that you can dispose of assets to avoid paying care fees.
- This is called deliberate deprivation of assets and the Local Authority will contest this and succeed. Whether you've transferred assets to children or set up a trust with the purpose of avoiding care fees, it will not work.
- Care cannot be the reason for setting up a FPT but may be a benefit if set up at the right time (when care isn't foreseeable), for the right reasons and for the right people.
- As a result, many of our clients have found that the assets held within their FPT have been disregarded during care fees means assessments
Children’s Inheritance Tax (IHT)
Even though you might not have an IHT issue, without a Trust you can unwittingly create one for your children. Assets left to them in Trust will not form part of their estate so will not attract IHT.