Avoiding long-term care avoidance

A leading long-term care planning expert has warned that local authorities are taking an increasingly ‘aggressive stance’ toward measures designed to avoid the cost of care fees.

Michael Young, who is chairman of the Society of Trust and Estate Practitioners (STEP), issued the warning about the use of trusts designed to avoid paying for long-term care.

According to reports, he suggested that advisers recommending these care fees avoidance trusts could face similar sanctions to those recently imposed on the care fees arm of HSBC.

Assets held within a trust are usually excluded from the financial assessment when determining whether fees should be funded by the local authority, as long as the purpose of the trust was not the avoidance of care fees.

As a result of the tough economic climate, local authorities are likely to apply a more aggressive stance when applying the ‘intentions test’ applicable to trust assets.

If they determine the purpose of a trust was to deliberately deprive an individual of assets that would be means tested for long-term care purposes, it is likely the trust assets would be included in the value.

Here at Informed Choice we are often approached by will writers and similar salespeople who have recently been promoting trust schemes to exclude assets from a long-term care assessment.

Asset protection trusts with the sole purpose of removing assets from the financial assessment for long-term care need to be avoided.

Losing access to your money in a trust environment and then discovering that the local authority will not pay for your care could have financially devastating consequences.

As with all things financial, the simplest solutions are usually the most effective. If you are offered a long-term care planning solution that appears too good to be true, it probably is!

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