A Guide to Asset Protection Trusts

25 Apr 2024 | Jenny Walsh

Table of Contents

One good reason to place your assets into a trust is to protect family wealth without fearing for its future. Trusts for asset protection can protect your assets from creditors and other claims and are an effective way to ensure that wealth stays in the hands of those you intend.

What is an asset protection trust?

An asset protection trust is a type of trust that is set up during your lifetime, but the assets in the trust are distributed to the beneficiaries after you die. Property, investments and other assets that are placed into the trust stop being part of your legal ownership, and that keeps them safe and out of reach from creditors and other claimants.

What is a family asset protection trust?

This is a type of asset protection trust used to hold family assets that are to be preserved for future generations, helping to manage, control, and protect the family wealth.

How do asset protection trusts work?

Like all trusts, asset protection trusts work by ring fencing assets and placing them in the trust container for the benefit of the trust’s beneficiaries. Unlike some other trusts, you can continue to use the assets prior to death, including living in the family home. When you die, the trust assets are passed to the beneficiaries according to the trust’s conditions.

Why should I set up an asset protection trust?

The main reason to set up an asset protection trust is to ensure that the family’s financial security is not eroded by unexpected changes in circumstances. You probably don’t expect to go bankrupt but, if you did, then your assets could be used to pay debts. In complex family structures, there’s also the risk of sideways disinheritance. This is where you pass away leaving everything to your partner and your partner remarries, leaving the family wealth to their new family and the children from your first marriage with nothing.

Asset protection funds are also widely touted as a way of protecting the family home from a local authority assessment for care fees. While they can be a helpful tool in residential care fee planning, keeping money away from a local authority means assessment cannot be the sole basis of setting up the trust.

What are the pros and cons of asset protection trusts?


  • Comprehensive legal protection for the trust assets, protecting them from claims
  • Probate is not necessary so the transfer of assets can be dealt with more quickly
  • The trust can be structured to minimise inheritance tax liabilities
  • You can do what you want with the assets during your lifetime
  • Flexibility regarding how assets are managed and distributed


  • Complex arrangements that require a high level of skill to establish
  • Reduces your access to funds and assets in a financial emergency
  • They’re not foolproof. The courts and local authorities can reverse any gifts into trusts where the trust is effectively a sham and to defraud creditors or avoid care home fees.

What is the best type of trust for asset protection?

This will depend entirely on your individual situation and what you are hoping to achieve. It is important to work with an experienced trusts lawyer who can take a holistic view of your needs and ensure all legal requirements are met. These trusts involve a lot of thought and careful planning. Our experienced team can help advise you on the best solutions to suit your family and financial circumstances.

How much does an asset protection trust cost?

The cost will depend on the complexity, type and value of the assets you wish to transfer into the trust. For example, conveyancing fees will be payable when transferring property into the trust in addition to the costs of setting up the trust. We offer competitive rates and can explain the cost of setting up an asset trust in more detail – get in touch with us to find out more.

How we can help?

Speak to a specialist trusts lawyer about an asset protection trust. Contact us to get started. Call 020 7485 8811 or fill in the contact form below.

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