Throughout your lifetime, you will have worked hard, made some sound investments and built up your personal and family wealth. Therefore, you may feel the need to protect your assets against potential unknown problems in the future.
There are many threats to assets and the value of your estate as one grows older. This may include:
- The need to pay for care in later life; be that in the home or elsewhere;
- The threat of fraud or being taken advantage of;
- The loss of assets for the payment of tax
In certain areas of the country, there have been dramatic rises in house prices, which may have increased your net worth significantly. As a result, you may find yourself in a position where you could be facing large tax bills: inheritance tax, capital gains tax and income tax all of which can have a big impact on the value of your estate.
Further you could find yourself concerned about the future loss of your home and wealth as funds are needed to pay for your needs in later life.
Every person’s situation is unique with different concerns and objectives.
The risks of unregulated schemes
There are many strategies and advisers out there with plans or products which they claim have been devised to safeguard your assets from the above mentioned threats. Many of these are unregulated and in many cases untested as to their effectiveness.
Some schemes involve given assets to a trust for which there are extremely high trust administration charges made by the scheme provider. Others involve transferring assets to other people in exchange for habitation agreements with no payments being made, others involve gifting property to children as a paper exercise but otherwise continuing to occupy the property.
None of these schemes are effective, some are unlawful and what’s more, they can leave you open to a huge amount of risk should the new owners of the property go bankrupt, get divorced, pass away or simply fall out with you and decide to sell the house from under you.
Other problems could arise from the local authority simply ignoring the transfer of assets and considering the asset to still be part of your estate. This could mean you have to pay for your care despite not having the assets with which to do so.
Some local authorities may go further and seek to actively overturn the transfer of assets via the Courts leading to large legal bills for you to pay.
HMRC may still the transfer as a gift with reservation of benefit, meaning it is still part of your taxable estate on death. This can be an administrative nightmare should the recipients of the gifts not be the executors within your will.
As you can see taking unqualified advice is extremely dangerous when it comes to asset preservation.
How SFE members can help with Asset Protection
SFE members who specialise in this area, will provide you with comprehensive advice based on a detailed understanding of your circumstances and objectives and will develop a strategy specifically for you completely within the boundaries of the law, which work to meet your requirements without exposing you to risk.
They will give advice on making tax efficient wills, lifetime gifts, lasting powers of attorney, trusts, reducing the potential taxes payable on your death and protecting your home and other assets should you need to go into nursing care. This may involve working with an independent financial advisor to explore annuities or other such insurance type products that can provide enough income in future to cover the costs of care without losing all of your capital.