Asset Protection Trusts in the UK
Achieving a comprehensive estate plan can be made easier with an Asset Protection Trust (APT), but should it? This blog examines the potential of APTs, exploring what they are and how to use them.
We also consider both sides - listing out all their benefits as well as making sure you know about any associated risks when utilising them in the UK.
What is it?
An Asset Protection Trust is a smart way to secure your estate. Whether pre-empting possible creditors, protecting against lawsuits or providing for loved ones – these trusts are invaluable in ensuring that the right people benefit from everything you've worked hard for.
For those looking to pass down their estate, an Asset Protection Trust is seen as a powerful form of protection. These trusts are established prior to death and provide various benefits for safeguarding assets such as reducing inheritance tax liabilities or ensuring asset continuity after the passing away of one's business partner in certain cases.
Reasons to get an Asset Protection Trust:
Protect your estate
Let your legacy stand the test of time with an Asset Protection Trust. Safeguard what you leave behind for generations to come and ensure that it gets into the right hands without any interference by creating a legally binding document specifically tailored to your needs.
Provide peace of mind knowing that, no matter what happens in life's unpredictable journey, those closest can experience tenderly cherished memories within their grasp when they need them most.
Remove any possibility of Probate costs
Protect your legacy by placing your assets into a trust. Not only will this ensure that probate is avoided, saving time and expense for those you leave behind - it also means peace of mind knowing there'll be no unnecessary delays in ensuring their future-security when the time comes.
Limit taxes
With the unpredictable nature of the future, it’s critical to be aware of what could happen if your beneficiaries get divorced or declare bankruptcy. Without sufficient protection, assets left for them may fall into disarray – and potentially even third-party hands. By leaving these resources in a trust, you can provide an extra layer of financial security against such interference.
Insure your estate after death
An Asset Protection Trust offers an invaluable level of security for estate planning. It ensures your beneficiaries are not unduly burdened by inheritance taxes, so they can benefit fully from their legacy.
How does an Asset Protection Trust work?
Asset Protection Trusts offer a powerful solution for safeguarding one's assets. Once an asset is placed in the trust, it becomes irreversibly owned by said trust - guaranteeing its safety and security from potential creditors or legal action.
Assets that can be placed into an Asset Protection Trust include:
Property
Capital above the £14,250 threshold
High-value assets
Investments
Benefits of this type of Trust
Regardless of your current situation, wisely opting for asset protection through a trust is always sound policy. Being proactive in this way safeguards against unforeseen complications and ensures any future setbacks can be navigated with greater ease.
Other potential benefits of creating an Asset Protection Trust include:
Maintain Residence: You can continue to access the same resources you put into trust prior to death. This means living in your own home is still an option for you.
Avoid probate: With APTs, you can ensure that your family is spared the costly and time-consuming probate process. Peace of mind for them - and peace in the estate.
Lower Care Fees: Through the use of an Asset Protection Trust, you can protect your hard-earned assets and reduce care home fees over a period of time.
Tax Benefits: If you're looking to save taxes, it may be worth considering the potential benefits of creating a Trust. Our professionals can help advise on the best strategy for your situation - get in touch today!
Future-proof inheritance: Ensure your beneficiaries' inheritances are protected in any eventuality, including potential divorce or bankruptcy proceedings. Secure their future and leave them with peace of mind knowing their inheritance will remain safe no matter what life throws at them.
Minimise Claims: The nature of the trust will usually prevent any claims.
Minimise Benefits Complications: Beneficiaries of an APT can rest assured their benefits status will remain fully intact without any risk to compromise it.
What are the downsides?
Asset Protection Trusts can be an effective strategy, but they come with perceived limitations in regard to control.
Poorly planned trusts may also provoke deliberate deprivation claims and attract unintended tax liabilities – making it doubly important that the right advice is sought prior to entering into any agreement.
Understanding these potential risks allows for a far more informed decision-making process when deciding if this type of trust should form part of your financial plan or not.
Finally, a poorly executed Trust could lead to you falling foul of Capital Gains, Land, Income, Stamp or Inheritance Tax.