Over recent years, so-called asset protection trusts have been heavily marketed to families as a way to protect property, reduce care fees, or make estate planning “simple”. At first glance, these trusts may sound appealing. After all, most people want to make sure their home and savings pass on to their loved ones, without unnecessary cost or stress.
But the reality is that these types of trusts can come with serious risks, and for the majority of people they are simply not the right option.
The risks of asset protection trusts
Some companies sell these trusts with bold promises, but they don’t always explain the potential downsides. Common risks include:
- Challenges from local authorities – If the trust is seen as an attempt to avoid paying care fees, it can be challenged and treated as if the property was never placed into trust.
- High costs and hidden charges – Initial set-up fees can be expensive, and ongoing management charges are not always made clear.
- Loss of control – Once your home is in the trust, you may no longer have the same freedom to deal with it as you wish.
- Unintended tax consequences – Poorly structured trusts can create unexpected inheritance tax or capital gains tax issues.
Why we don’t recommend them for most people
At SLS Wills and More, we pride ourselves on giving clear, honest advice. While trusts are a valuable tool in estate planning, they must be used in the right way and for the right reasons. Asset protection trusts are rarely suitable, and in most cases they create more problems than they solve.
For the majority of families, there are safer and more effective ways to plan ahead, such as:
- Creating a valid Will
- Putting Lasting Powers of Attorney in place
- Considering simple trust arrangements where they are appropriate
- Reviewing your estate planning regularly as circumstances change
Getting the right advice matters
Estate planning is never “one size fits all”. What works well for one family could be completely wrong for another. That’s why we take the time to understand your circumstances, explain your options clearly, and guide you towards the solutions that genuinely protect your wishes and your loved ones.
If you’ve been approached about an asset protection trust, or you’re worried about the risks, please speak to us before making any decisions.
