Homeowners warned on 'trust' schemes

There's increased concern about so-called 'trust' schemes, which are targeted at home owners considering longer term residential care.

Currently some schemes claim their asset protection programs will ensure properties remain in trust for a family, thereby avoiding local authority means-testing.

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'Blind eye' - for how long?

The worry is that not all local authorities turn a 'blind eye' to such schemes, so your property may still be included when your assets are means tested for care funding. And the fees involved for their setting up in the first place are not cheap.

Janet Davies, from care fees planning service Symponia, told the Telegraph that local authorities are increasingly employing 'avoidance officers' to ensure residents are not using such vehicles to nip around care fees, so protecting their assets. "This activity is bound to increase because money is tight," she says.

Worse, some who are found to have paid for such schemes in the hope of handing on their property to their family could find they're forced to comply with local authority means-testing criteria - and, on top, would shoulder the extra asset protection set-up costs. A double blow.


Although the Government is claiming nobody's home will have to be sold to fund residential care, there is great concern - and increasing suspicion - about the detail.

For example, financial planner Clive Barwell says that where payment of care costs are deferred, with a charge taken on the home and the fees paid by the Local Authority, until the property is sold, it's still a discretionary move.

Government to charge interest

"Local Authorities are free to opt in or out," he says in his blog. "However, if they opt in, the loan is interest-free, which is clearly beneficial as compared to commercial Equity Release." From April 2015, the Government is making the deferred scheme mandatory on all local authorities.

But Barwell warns of a sting in the tail - the new scheme carries an interest charge. "In this way, the Government can claim nobody will have to sell their own home to pay for their care. However, it doesn't mean the family won't have to sell the home after Granny's death to clear the loan and accrued interest."
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