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Asset Protection Trusts

An Asset Protection Trust (APT) is designed to safeguard your valuable assets, such as your home, family heirlooms, or other important possessions, from being sold or used in ways that go against your wishes.

Asset Protection Trusts Explained:

What is a Trust?

An Asset Protection Trust (APT) is a legal arrangement used to manage and safeguard your estate from potential risks. It allows you to protect key assets so they can pass to your chosen beneficiaries without the threat of interference from creditors or other claims.

What are Trusts commonly used for?

An APT provides one of the strongest forms of protection available against creditors, legal action, or financial claims that could affect your estate in the future.

Once assets are placed into the Trust, they cannot be removed without the consent of the person who created it (the settlor).

What goes in a Trust?

Typically, people choose to place their most valuable or sentimental assets into an Asset Protection Trust.

This might include:

Property, such as the family home or a holiday home (including a share in a jointly owned property)

Capital above £14,250 (as amounts below this are not included in means testing)

High-value investments

Important family heirlooms

If you are transferring any assets into an Asset Protection Trust that may trigger Capital Gains Tax, it is important to seek proper advice and proceed with care.

How to set one up

Once you’ve considered your options, an Asset Protection Trust can provide lasting peace of mind by helping to secure your loved ones' futures, whatever happens. Get in touch using the link below.

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How to Set Up an Asset Protection Trust

Setting up an Asset Protection Trust is a significant step in safeguarding your estate, and it requires careful planning. You’ll need to understand the type of Trust that suits your needs and work with a qualified consultant to make sure everything is done correctly. Once you're confident in your choice, you can move on to drafting the Trust, transferring assets, and arranging for its ongoing management.

Here’s an overview of what the process should involve:

Step 1: Research

Before anything else, it’s important to carry out thorough research. This includes understanding the different types of Asset Protection Trusts and which one is right for your circumstances, as well as finding a professional you can trust to guide you through the process.

While an Asset Protection Trust can be an excellent way to secure your estate and future-proof your family’s inheritance, it can involve a considerable financial commitment. You should weigh up the costs and benefits, and make sure the structure fits your long-term goals.

Choosing the right consultant is just as important as choosing the right Trust. A poorly drafted Trust can lead to issues later on, including unnecessary tax liabilities. Look for someone with strong experience in estate planning, particularly with APTs, and a clear understanding of the legal landscape in your area.

Step 2: Drafting the Trust Documents

Creating the Trust involves several key steps, much like setting up any other irrevocable Trust. You’ll need to:

Appoint your trustee

Name your beneficiaries

Identify and list the assets you want to include

Set out clear instructions for how the assets should be managed

The assets you might place into an Asset Protection Trust include:

Cash and savings

Investments or securities

Property or land

Business interests and company assets

Vehicles

High-value items such as jewellery, artwork, or family heirlooms

It’s essential that the documentation includes clear guidance for the trustee on how these assets should be managed on behalf of both you and your beneficiaries.

Step 3: Transferring Assets into the Trust

Once the Trust is created, the next step is to transfer your chosen assets into it. This part must be handled carefully, ideally with support from a knowledgeable consultant who can advise on any potential tax implications or other consequences.

Each asset must be considered individually. Questions about Capital Gains Tax, how assets might increase in value, or what would happen in the event of a spouse’s death should all be discussed in advance. Your consultant will guide you through this to make sure everything is structured in a way that meets your objectives.

Step 4: Ongoing Trust Management

Once your assets have been transferred, the Trust enters the management phase. Trustees are responsible for running the Trust in line with your instructions and legal obligations. Their duties typically include:

Administering the Trust according to your wishes

Managing the assets, including tax matters

Complying with all relevant legal requirements

Keeping detailed records of asset values and distributions

Reporting to beneficiaries and distributing assets as needed

Effective management ensures that the Trust continues to protect your estate over time and supports your intended outcomes.

Benefits of Setting Up a Trust to Protect Your Assets

Creating a Trust to protect your assets offers a range of advantages, particularly when planning for the future in the UK. Key benefits include:

Protecting property and valuables from future creditors

Irrevocable structure, meaning the Trust cannot be undone once set up

No need for probate on assets held in the Trust

Potential to reduce care fees (provided the Trust is not set up with the intention of avoiding them)

Continued control over your assets during your lifetime

Possible tax advantages, depending on your circumstances

Preserving your family home for the benefit of loved ones

Safeguarding children’s inheritance in the event of divorce

Protecting assets from being affected by a beneficiary’s future divorce

Ensuring only named beneficiaries receive what you leave behind

Reducing the risk of claims being made against your estate

Avoiding lengthy and costly court proceedings

Preventing impact on benefits for dependants or vulnerable beneficiaries

A Trust offers a strong and flexible way to secure your estate and provide for your family with confidence.

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Other Types of Trusts

The right Trust for you will depend on the assets you want to pass on, who your beneficiaries are, and how much control you wish to retain. In addition to Asset Protection Trusts, there are other options available, such as Family Trusts and Property Protection Trusts, each offering different benefits based on your personal and financial goals.

Just Wills and Legal Services has been helping families plan for the future since 2013. With over 100,000 clients served, our experienced team provides trusted guidance in Wills, estate planning, and probate. We are proud members of the Society of Will Writers and uphold the highest professional standards.

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