A Guide to Asset Protection Trusts

Contact

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?

Pros:

  • 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

Cons:

  • 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.

Share this article

  • “A full service team which punches above its weight – dealing with a range of UK and international clients, it is a great option for those who would prefer a non-central London firm.”

Get Expert Legal Advice Today Our experienced team offers clear, practical advice tailored to your needs Get Expert Guidance

Contact us today

Email us Send us an email and we’ll get back to you






    • The group is noted for its expertise in matters relating to cycling injuries, and is the official legal partner of the London Cycling Campaign charity.

      Legal 500 2022

    • Thank you for your legal advice and seeing us through this smooth purchase.

      Property department

    • William Ford is one of the most highly-regarded solicitors in his area.

      Legal 500 2025

    • Jan Atkinson is confident with a straightforward approach. Her practice covers both contentious and non-contentious matters, including wealth planning and estate administration.

      Chambers UK

    • "Lisa can handle the large and complicated cases but takes equal care with the smaller cases. She is a highly skilled mediator who is a consummate professional."

      The Legal 500

    Related InsightsVIEW ALL

    1. white lilies
      9.12.2024

      Executors’ and Administrators’ Duties

      Introduction When someone dies, others need to take on the formal responsibility for dealing with the deceased’s estate. If...

      Read more
    2. white lily
      9.12.2024

      What to Do When Someone Dies

      Introduction When a loved one dies, getting to grips with what you need to do can seem bewildering. The first...

      Read more
    3. making a will during covid
      6.11.2024

      High Court Validates Donation in Will Dispute

      High Court validates gift made during Covid lockdown in Will Dispute In what may be one of the first covid...

      Read more
    4. dementia
      5.11.2024

      Dementia: Protecting The Interests Of Each Spouse

      Protecting Loved Ones with Dementia Dementia is a cruel disease, slowly robbing individuals of their character and their abilities. The...

      Read more
    5. mediation
      12.7.2024

      Probate Mediation

      Why choose mediation for contested probate? At Osbornes, we understand that probate litigation is often highly emotive. Unfortunately, there is...

      Read more
    6. handwriting
      12.7.2024

      Is A Handwritten Will Legal?

      Is a handwritten will legal? Is a question we often hear, especially when time is of the essence, and putting...

      Read more
    7. english countryside
      25.4.2024

      A Guide to Will Trusts

      What is a trust in a will ? Setting up a trust in your will can protect assets for your loved...

      Read more
    8. osbornes hampstead office
      25.4.2024

      What is a Mirror Will?

      Mirror wills are mirror images of each other and practically the same in every way. They suit couples, married or...

      Read more
    9. english countryside
      23.4.2024

      A Guide to Life Interest Trusts

      In today’s complex families, protecting assets for your children while ensuring that a surviving spouse can still enjoy them...

      Read more
    10. desk with flowers
      23.4.2024

      Discretionary Trusts

      What is a discretionary trust? With a discretionary trust, there is no automatic right for beneficiaries to receive funds from...

      Read more
    11. night sky
      22.4.2024

      5 Things You Should Never Put in a Will

      When it comes to writing a will, you want to make sure that your wishes are known and that the...

      Read more
    12. Forged will pic
      22.3.2024

      Forged Wills

      Will fraud and forged wills are increasingly common. If the contents of a will comes as a surprise, then one...

      Read more
    13. 14.2.2024

      What is Proprietary Estoppel?

      What is Estoppel? In general terms, estoppels operate where one party has acted on the basis of a statement made...

      Read more
    14. 14.2.2024

      Duties of Trustees

      When setting up or running a trust it’s important to know what the trustees duties are. Trustees are key...

      Read more
    15. Deed of variation to a will
      3.11.2023

      Deed of Variation: Making a Change to an...

      What is a deed of variation? A deed of variation is a legal document which can be used to alter...

      Read more
    16. Constructive Trusts
      31.10.2023

      Constructive Trusts

      Property rights are not always clear-cut. Sometimes, a person who does not legally own a property could be entitled to...

      Read more
    17. osbornes law writing pad
      17.9.2023

      What is a Codicil to a Will?

      Codicil to a will Life has a habit of changing and your will may need to change with it. A...

      Read more
    18. man looking at a lake
      31.8.2023

      What Happens if Someone has Dementia and No...

      Can you get Power of Attorney for someone with dementia? It’s a sad reality in an ageing population that...

      Read more
    19. waiting
      31.8.2023

      Can a Lasting Power of Attorney Be Overridden?

      Dramatic rise in people making a Power of Attorney The number of people recognising the importance of making a Lasting...

      Read more
    20. 10 tips
      26.7.2023

      Wills Disputes: The Duty To Account Is Not...

      Beneficiaries frequently ask us whether trustees or personal representatives can be required to provide a financial account. Their request may...

      Read more
    21. international map and money
      9.6.2023

      High profile probate dispute of Vladimir Scherbakov

      Probate dispute of Russian billionaire’s missing will You’d imagine a wealthy businessman with assets in different countries would...

      Read more
    22. older couple
      9.6.2023

      Of Bad Character: Undue Influence Claim Succeeds

      Naidoo v Barton: undue influence and the risks of mutual wills Can someone’s bad character be used to prove...

      Read more
    23. lady holding a cup
      22.5.2023

      Case Law: Dementia-Induced Mild Cognitive Impairment

      Introduction Dementia is a harsh reality for increasing numbers of families. Sadly, it means the disputed wills solicitors at Osbornes...

      Read more
    24. eu flags
      26.4.2023

      German Court Rules on EU Succession Regulation

      Succession laws vary from country to country which historically made the administration of cross-border estates potentially complex. Since 17 August 2015, the...

      Read more

    VIEW ALL