Family Protection Trust

A Family Protection Trust (also known as a Lifetime Discretionary Trust) is one of the most effective ways to protect your wealth, home, and savings while ensuring your loved ones are looked after in the future.

By placing your assets into a Family Protection Trust, you can:

• Safeguard assets from being divided in the event of a beneficiary’s divorce.
• Prevent assets from passing to a new spouse or partner after your death.
• Protect dependants who may struggle with disability, addiction, or financial difficulties.
• Reduce exposure to inheritance tax (IHT) and costly care home fees (which often range between £20,000 and £50,000 per year).

Statistics show that 1 in 3 women and 1 in 4 men over 65 will require care—making future planning essential.

What is family protection trust?

A Family Protection Trust is a legal arrangement where you place your home, savings, stocks, and other assets into a trust during your lifetime.

You retain full control of your assets:

• Use, add, sell, or replace them.
• Borrow against them if needed.
• Pass them down to your chosen beneficiaries.

The key benefit? Third parties cannot access or force you to release your assets. After your death, the Trust passes directly to your beneficiaries without needing a Grant of Probate, saving time, stress, and costs.

Key Benefits of a Family Protection Trust

• Avoid Probate – assets pass directly to beneficiaries.
• Protect Against Divorce Claims – assets remain secure within the Trust.
• Inheritance Tax Protection – reduce or avoid unnecessary tax bills.
• Shield Against Care Fees – keep your estate intact for your family.
• Ongoing Family Security – protect children and dependants with special needs or vulnerabilities.

Trust Administration and Annual Reviews

Every Family Protection Trust requires an annual review to keep it up to date. This review covers:

• Changes in property values or inheritance.
• Updates to family circumstances (e.g., fallouts or reconciliations).
• HMRC requirements such as trust registration and trust accounts.

Annual management fees: £95–£200 per year, covering administration, HMRC compliance, and proactive trust management.

Flexibility and Control

• Change your mind anytime – you can transfer assets back to your name if required (property transfers may involve a conveyancing fee).
• Unlimited asset value – there is no cap on what you can place in trust.
• Tax planning – assets above the nil-rate band (£325,000) may trigger a 20% lifetime IHT charge. Couples can set up two trusts, covering up to £650,000 tax-free.
• Protect part of your home – if your property exceeds the nil-rate band, you can place a percentage (e.g., 80%) into the Trust, protecting the majority of your home from tax charges.

Family Protection Trust Costs

Property that isn’t your principal private residence may create an immediate Capital Gains Tax charge. Your specialist advisor can provide further advice concerning your options.

Is there any limit on the value of assets placed within a family protection trust?

• Single Trust: £2,650 + disbursements
• Couple (two trusts): £3,650 + disbursements

Considering the potential savings in probate fees, care costs, and inheritance tax, a Family Protection Trust can pay for itself many times over.

Secure Your Family’s Future Today

A Family Protection Trust gives you the peace of mind that your wealth and property are safe, protected from external claims, and passed directly to the people you choose.

Contact our team today to discuss setting up a Family Protection Trust and protecting your legacy.