Mrs Y settled 50% of her property into a Family Probate Trust in 2011. In 2019, Mrs Y entered long term care. A financial assessment was completed, and the council confirmed that they were taking into account the 50% share in the property held absolutely by Mrs Y for the purposes of funding the placement.
In our capacity as Professional Trustees of the Trust, we confirmed to the Council that there was no interest in the property for sale, reversionary or otherwise (as the Council had misunderstood the terms of the trust). Whilst Mrs Y did retain 50% of the property, this could not be of any value when it was not possible to sell the 50% and realise the proceeds. We also confirmed that following the passing of Mrs Y, the Trust would continue as a standard discretionary Trust and the Trustees had no intention of selling the property at any point. This means that there would be no market value for Mrs Y’s share of the property. We reminded that council that this approach was supported by precedent in the form of a case that had already been before the courts (Chief Adjudication Officer v Palfrey (1995).
Outcome:
After 2 years of regular correspondence with the Council, we are pleased to confirm that the correct approach was applied by the council who decided to disregard the 50% share owned in the property absolutely.
Conclusion:
This case studies highlight the importance of lifetime planning utilising trusts and using the help and support of a professional trustee such as DB Consultancy and Countrywide, who have a wealth of experience in these matters. There can be many motivations to settle assets into trust – certainty, or perhaps to hand over control of the assets to the chosen trustees (which may or may not include the Settlor) so that they can be readily and more easily managed for the benefit of the beneficiaries. Settling assets into trust may also mean there is no delay in accessing the assets for the beneficiaries following the death of the Settlor, where a Grant of Probate may otherwise be required where assets are held absolutely. In cases where a Will could be challenged, did you know that a timely settlement of an asset into Trust during lifetime could prevent it from being subject to an Inheritance Act claim on death?
In this case, the assets were protected from the cost of long term care and the inheritance preserved for the families concerned.
