ULTIMATE ASSET PROTECTION... The LCS Ultimate Asset Protection Trust (UAPT) safeguards and protects both you and your family

ACT TO S NOW A PRO VE AND TECT ASSE YOUR TS

Contents

Your Ultimate Asset Protection Trust (UAPT)

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Reasons to choose LCS

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What are LCS Ultimate Asset Protection Trusts?

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What can I put into my Ultimate Asset Protection Trust?

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Do I keep control over the Trust Assets and who can benefit from my Trust?

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What are the Benefits?

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What are my Responsibilities?

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After my Trust is set up

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Examples Of Possible Scenarios: Protection against Care Costs

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Protection against Divorce

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Protection against Inheritance Tax

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Summary of Benefits and Protection

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Lasting Powers of Attorney (LPAs)

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Frequently Asked Questions

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**Please note that all tax thresholds and local authority charges are correct at time of publishing but may change in the future**

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

Your Ultimate Asset Protection Trust (UAPT)

Your Will only covers assets owned by you at the date of your death and these assets are usually unprotected. Such assets would generally have to go through the Probate Registry process to be dealt with and distributed in accordance with the terms of your Will.

It is still important to have a Will, even though the main part of your estate may be held within your UAPT. LCS can prepare an up to date Will for you for your assets which are not held within your UAPT.

However, your Ultimate Asset Protection Trust (UAPT) has been designed to give “ring fenced” protection for your assets held within your UAPT during your lifetime. This protection continues after your death, thus ensuring that your loved ones will definitely inherit without the need for Probate.

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Reasons to choose LCS

We have been offering a complete range of estate planning services since 1990. We carry £5 million Professional Indemnity insurance cover and have over 23,000 clients throughout the UK. We pride ourselves on being user friendly and offer a free home visit service for initial consultations. Choosing LCS will give you peace of mind knowing that you have chosen an established reliable specialist firm to deliver your needs. Our highly trained legal department includes our company Lawyer (CFILEx), our Trust specialists who are STEP trained and our Certified Paralegals. Our legal team are backed up by our carefully chosen panel of approved

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specialists which includes Solicitors, Barristers, Chartered Accountants and Independent Financial Advisers (IFAs). The unique service we offer will allow you to receive up to date information, support and guidance when you want and this is provided at no additional cost to you. Unlike many other Trust providers the LCS UAPT allows you to place property, cash and investments into your Trust. We will provide on-going support and guidance to you and your Trustees after your UAPT has been created.

What are LCS Ultimate Asset Protection Trusts?

Our Ultimate Asset Protection Trusts are a specially developed form of Discretionary Trust. We often draft Discretionary Trusts to protect funds from being wasted or eroded by local authority or creditors for specific beneficiaries. However, unlike the UAPT these types of Trusts are contained within a Will and can only be set up on the death of the person who has made the Will. Unlike Will Trusts, Asset Protection Trusts are created as a separate document during your lifetime to protect your assets from various potential situations. You will be the principal beneficiary of your UAPT during your lifetime through granting yourself a ‘lifetime interest’.

After appointing your chosen Trustees they will manage your Trust assets so those assets will not be affected by the financial destruction of divorce, bankruptcy or remarriage. Subject to qualification they may also protect your family from long term care costs. This is because the UAPT assets are not owned by you but by the UAPT. This type of Trust should not be used if you are about to require long term care as the Local Authority could challenge and overturn a Trust. Neither can the Trust be used as a means to solely protect assets from imminent divorce, debt or insolvency.

ongoing protection Your UAPT can continue to protect your beneficiaries for up to 125 years from the date that it was set up!

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

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What Can I Put into My Ultimate Asset Protection Trust? You can decide exactly what you want to place into your UAPT. This could be property or cash or investments, or a combination of these. Under current legislation (correct as at 2013) each individual can place up to the Nil Rate Band (currently £325,000) into their Trust free of tax providing any increase in the Trust value does not exceed the threshold. This means that a couple could place up to £650,000 of assets into a joint UAPT without incurring any immediate tax liability. Any significant gifts made by you over the 7 years prior to setting up your Trust could affect the amount that you can place into your Trust without incurring any tax.

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Should you wish to place more than the Nil Rate Band into your Trust you may do so but this could give rise to an immediate tax liability of 20% on the amount over the Nil Rate Band. Anyone who had set up their Trust more than 7 years ago could now add up to another Nil Rate Band of assets into their Fund. Alternatively, it may be more tax efficient to create another UAPT. LCS is not regulated by the FCA to provide financial advice, however our associate IFAs are. They will advise you on the possible benefits and tax liabilities should you wish to place more than the amount of the Nil Rate Band into your Trust.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

Do I Keep Control over the Trust Assets?

Once you have decided which assets are to be protected by putting them into your UAPT they become the property of the Trust. Your Trustees will then be responsible for the Trust assets. This is why it is vital for you to carefully consider who to appoint into the role of Trustee. You can, if you wish, appoint yourself as one of the Trustees but you cannot be

a sole Trustee of your Trust. You need to appoint at least two other Trustees. Trustees must be reliable and trustworthy. You would be advised not to appoint someone who has been bankrupt or involved in crimes relating to financial matters. You could appoint a professional Trustee and LCS would be happy to act for you at a very competitive rate.

WHO CAN BENEFIT? You can name yourself as the principal beneficiary along with your spouse or partner if you wish. Usually, people will name their children and any future grandchildren as subsequent or potential beneficiaries. Whilst you and your spouse or partner would benefit from the Trust during your lifetime, other beneficiaries would not necessarily benefit during this period.

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What are the Benefits?

Assets held within your UAPT will not be subjected to the usual lengthy and costly process of Probate when you die. Assets can be distributed immediately after your death saving your Executors and Trustees time and money. Assets outside of your Trust may still require Probate and LCS can offer a professional service to assist your Executors at greatly discounted and highly competitive rates.

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It is not always in the best interest of a beneficiary to receive money from the Trust Fund immediately following your death. For instance, if a beneficiary was in the process of getting divorced, the Trustees could ‘hold back’ any payment to this individual.

ENSU ONL RING TH Y A WAN THOSE Y T O T TO BENE U FIT DO S O

After the divorce is finalised their share can be paid to them, avoiding inclusion in divorce settlements. The Trustees could also hold back any payment to a beneficiary experiencing insolvency problems. This would also apply if the person who created the UAPT became insolvent, the Trust assets would be protected providing this problem could not have realistically been foreseen. After your death, your surviving spouse or partner might remarry and/or have more children with a new partner. If this were to happen, your estate could pass to the new partner or any children from that relationship. The UAPT protects your spouse or partner and ensures that your chosen beneficiaries do not lose out. Your Will may exclude estranged children who you do not want to benefit. However, an inheritance claim against your estate could still be made costing thousands of pounds in legal fees. The UAPT

ensures that only those you want to benefit will do so and anyone excluded will be unable to make a claim against the Trust Fund. Anyone with savings of £23,250 or more will be expected to pay the full cost of their care. Once your savings drop below this figure and until they reach £14,250, you will have to contribute towards your care at a rate of £1 in every £250. Placing as much as possible above £14,250 into your UAPT will maximise your protection. Savings below £14,250 are disregarded should you be means assessed for care in the future.

on-going protection Should your children divorce, remarry or change their own Will in the future, your grandchildren could lose out. With a UAPT you can ensure provision is made for your grandchildren.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

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What are my Responsibilities?

SUP YOU PORTING EVE OF T RY STEP HE W AY

Careful thought and consideration is needed by you regarding which assets you will place into your Trust. Our service includes a full review of your assets including: - Investments, Bonds, ISAs, Pensions, Life Assurances, Death in Service Benefits, Savings, Cash and any other assets held by you.

Your Trustees can avoid this through careful planning and with advice from our associate IFAs. LCS could provide your Trustees with access to on-going specialist advice if they require. This would assist them in meeting the taxation requirements of the UAPT.

Upon creating a UAPT, H M Revenue & Customs (HMRC) will need to be notified that the Trust is in existence which LCS will do for you. You will be asked to provide us with details of your National Insurance number, Tax reference number and Tax office address. These details are necessary for completing the HMRC documentation.

If you are placing your home into your UAPT, HM Land Registry will need to be informed and the correct forms completed. A charge is usually made by HM Land Registry for entering the necessary changes on their records. We will be able to check to ascertain whether your property is already registered with the Land Registry and advise you of the fees. LCS will complete all of the necessary documentation for you.

The Trustees of your UAPT would be responsible for completing annual tax returns on behalf of the Trust and paying any tax due. Every 10 years your UAPT will be assessed to see if the Trust assets exceed the Inheritance Tax threshold, if they do, a periodic charge will be levied.

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Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

After My Trust is set up

What happens if I go into care? If you need to go into full time nursing or residential care within six months of creating your UAPT, it is likely that the Local Authority would challenge the Trust as having been created deliberately to avoid paying care fees. If this should happen, the UAPT would continue with some or all of your care costs being paid from the assets within your UAPT. Even though you would be paying for your care, your UAPT would still benefit from the other protections (probate, divorce, insolvency and remarriage) as detailed previously. If however, your UAPT had been set up for over six months and there had not been any foreseeable need prior to you receiving care, then it would be much harder for the Local Authority to prove deliberate deprivation of assets. It is vital when creating the UAPT that you show that it was your intention to use the Trust as a means of protection for the many other reasons, rather than simply to avoid care costs. Long term care fee funding is extremely topical with the media and politicians. Whilst all political parties have differing strategies,

it is clear that they all want us to pay all or a considerable proportion of our care costs. Whilst some people may accept that it is reasonable to pay something, others believe that they have already paid enough in Income Tax and National Insurance contributions over many years. Remember that currently anything over £14,250 (correct at time of printing) can be taken for care fees if necessary! Another concern for some people is if their spouse is already in care. In this situation it is important to create a UAPT for the spouse who is not in care, thus protecting their half of the estate. Very few people can say that they did not have to work hard to pay off their mortgage and accumulate their assets. However, once you have done this the hard job is holding on to those assets for you to enjoy during your lifetime and then to pass on to your children or others after your death.

The LCS Ultimate Asset Protection Trust will do this for you - and more.

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Examples of Possible Scenarios

1. Protection against Care Costs Hello, my name is Philip and I wanted to share with you how a UAPT helped my family and I protect our assets when we saw my mother’s savings disappear almost overnight. Mum was a nurse, she worked hard all her life helping anyone she could. After the years of saving, paying insurances and taxes, Mum had hoped to leave something to help my sister and I once she had passed away. During her later years, Mum lived in a retirement flat until it became too much for her and she decided to move into a residential care home. We had asked the local council about any financial assistance that my mother would be entitled to and following an assessment of what she had managed to save during her working life, we

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found that the State would use up nearly all of her savings and all the money from the sale of her flat to pay for her care fees. It was very distressing for her to be informed that despite the years of National Insurance payments, the State would only provide some basic low level financial help once her savings and possessions value fell below £23,250.

THE U HELP APT SAFE ED ME GU CHIL ARD MY DRE FUTU N’S RE With the extremely high costs of care, it meant that almost everything my Mum owned was swallowed up in a matter of months, Mum was devastated. Upon reaching my fifties I had started to think much more about my future and wanted to see if anything could be done to ensure my children including my disabled son Alex, would receive the maximum amount possible when I passed away or if I needed care. I had become increasingly worried about the current economic/financial problems in the world and how this would affect my young children with the uncertain future they faced.

set up an Ultimate Asset Protection Trust for my children. This helped safeguard their future as well as protecting Alex should he need on-going care after I was gone which was also a concern. The real bonus was when LCS advised me that the same Trust could be tailored specifically for my needs, in such a way as to also provide additional protection from my home being lost should I need care in the future.

THE RIGHT CHOICE I am a Policeman, and have lived my life honourably by having respect for the Law. I was therefore keen to make sure that any action I took would be lawful, and that I wasn’t becoming part of an improper scheme.

I spoke to LCS to discuss my worries and wanted to see if there was any action I could take right away. As part of the review and options discussed with me by the legal team at LCS, I was able to

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

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Examples of Possible Scenarios

2. Protection against Divorce Hello, my name is Elizabeth. I married for the second time - a lovely man called Richard, with whom I have enjoyed a wonderful time bringing up my children from my first marriage. He helps support the children and I am grateful for all he does. But no-one knows what is around the corner. What will happen if I pass away first? I would want Richard to consider remarriage if the right person came along. When I remarried, my old Will became invalid, and without a new Will the State could decide who would inherit my estate. This made me very concerned as my father remarried after the death of my mother, and when he passed away he left everything to his second wife. When the time came and she passed away, my father’s estate was also distributed to my step siblings.

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This meant that my brother and I received almost nothing from our fathers’ estate; we even had to give up precious family heirlooms. I know this wasn’t what my father would have wanted and the arguments and stress it caused the family lasted far too long. I therefore wanted to make sure that nothing like that would ever happen to my family. If possible, I wanted to ensure that my assets and the few items that I did get from Dad, would definitely be passed onto my children. We always hope that our kids will find ‘the one’, but we have all heard the horrible statistic that one in three marriages now end in divorce. I wanted to ensure anything I left to my children was as fully protected as possible should they also go through a divorce.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

PRO T MY C ECTING ASSE HILDREN TS A ’S G DIVO AINST RCE

Over the possible options available to me. I found that their Ultimate Asset Protection Trust would allow me to place funds into a Trust for my children. This would then be out of reach and not included in any divorce if my children were to suffer a marital breakdown as I did. quick & simple I found, to my surprise, that Trusts are not the frightening, complex preserve of the rich and famous. They can be used by anyone to help safeguard the possessions and savings that they have worked hard to obtain.

I spoke to LCS and looked

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Examples of Possible Scenarios

3. Protection against Inheritance Tax Hello, my name is Martin. I always wondered why the well-off were able to pass on a great deal of wealth when they passed away. I also thought that Inheritance Tax was only applied to large valuable estates. I have worked for various public departments all my life and saved early. Now, I find that after all my hard work, when I die, the taxman will take a sizable bite out of my estate. I want to ensure that I leave as much as possible to my children and my wonderful grandchildren whose economic future is so uncertain.

I spoke to LCS whose associated IFA reviewed my circumstances and provided me with a detailed number of options available in order to save on Inheritance Tax.

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In my case this included taking assets worth many thousands of pounds out of my estate and putting them into an Ultimate Asset Protection Trust. This also ensures that any inheritance passed on to grandchildren from my UAPT will not be taxed when my children pass away. This has given me great piece of mind knowing that I will still benefit from the income from my investments during my life, whilst passing on an inheritance to the kids that will give them more security for their future.

Summary of Benefits and Protection

A Way To Keep More Of What You Earn Ultimate Asset Protection Trusts (UAPT) meet the needs of most people, not just the very wealthy. Even if you’re not among the richest people in the country, you may still be able to enjoy protection of your home and savings as well as some of the other benefits. Privacy If you are the sort of person who would not want details of your estate made public after your death - as it would be after Probate was obtained, then an LCS UAPT could maintain your privacy. Stay In Control The UAPT allows you to provide the Trustees with specific guidance regarding the Trust assets. You must ensure that you can fully trust and rely upon your chosen Trustees to manage your Trust as you would wish. Probate No Probate fees or delays in dealing with your UAPT assets.

Claims No Inheritance Act claims against your UAPT assets after your death. Inheritance Protection Your UAPT protects against any sideways disinheritance. Court of Protection (CoP) No COP control over your UAPT assets if you should lose mental capacity, your chosen Trustees retain control of the Trust assets. Otherwise, without the UAPT the COP could take control of your assets and manage them as they decided. Bankruptcy Your UAPT can provide protection from the loss of Trust assets due to Insolvency and Bankruptcy. This protection can cover you as well as your beneficiaries. Relationship Failure Financial protection of your UAPT assets from relationship failure and/or divorce.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

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Summary Benefits and Protection (continued)

Unemployment or Disablement Benefits If your beneficiaries were in receipt of any State benefits and they were to inherit any money, this would affect their benefit entitlement. Your Trustees can manage that beneficiary’s inheritance so that they still benefit from the UAPT whilst retaining their State benefits.

Everyone has differing needs and estates vary in size. We will draft your UAPT to protect you to the best possible extent. However, you will need to make the decisions as to what you place into your Trust and we will then draft your Trust document based upon what you decide and the information provided by you. Professional Trustees

Tax Savings The UAPT can give protection from Inheritance Tax. There is likely to be huge Inheritance Tax savings for your future beneficiaries who are benefiting from your UAPT.

We can act as Professional Trustees at competitive rates depending on what your UAPT comprises. The more complex, the greater the fees. We will advise you accordingly upon request. Taxation and Returns

Care Home Fees The UAPT can also give the added benefit of care home fee protection should you need care in the future. However, it cannot be set up solely for the purpose of avoiding care fees. At a time when care fees can cost thousands of pounds each year, a UAPT set up properly can be a huge benefit.

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Considerations

We do not perform taxation work or file annual accounts for any Trust. However, we can arrange for this to be completed by approved associate Accountants and can advise the cost upon request. Obviously, if we are appointed as your Trustees we will be responsible for ensuring that our associate Accountants carry out this work in order for us to file the Trust’s annual tax return as necessary.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

Lasting Powers of Attorney (LPA)

We would certainly advise you to consider having Lasting Powers of Attorney in place and we can arrange this for you. LPAs are an essential part of preparing and planning for the future. Should you lose mental capacity and be unable to manage your own affairs, appointing people you trust to be your Attorneys whilst you have mental capacity is far better than not doing so.

There are two types of LPA, the Property and Financial Affairs LPA which allows your Attorneys to manage your assets and finances held outside your Trust. Also, the Health and Welfare LPA which allows your Attorneys to make decisions on your behalf regarding your health and medical welfare after you have lost mental capacity.

Anyone who loses mental capacity without preparing an LPA, will have a Deputy appointed for them by the Courts.

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Frequently Asked Questions

What Is The Benefit Of An Ultimate Asset Protection Trust? During your lifetime the UAPT protects your assets as a Life Interest Trust with you as the ‘principal beneficiary’. After your death, the UAPT then protects the assets for your beneficiaries in the form of a Discretionary Trust. What Assets Can I Protect Within My UAPT? You can protect your property and investments and savings up to the Inheritance Tax threshold which is currently £325,000. If you have other high value assets such as classic cars, planes or boats, these can also be protected within your UAPT. Business assets and interests can also be protected. As the amount disregarded by local authorities is currently £14,250 people often try to protect everything over this amount within their Trust.

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It is possible that some assets including shares, investments and property could gain in value and will require special consideration where applicable to avoid tax and capital gains liabilities. If you have assets which exceed the Inheritance Tax threshold we would advise that you get additional financial and estate planning advice from our approved associate Independent Financial Advisers. It may be necessary to review some of your savings in order to protect them as, for instance, you cannot protect an ISA within your UAPT. Can I Add Additional Assets To My UAPT? You may add additional assets to your UAPT whenever you wish. However you must be careful not to exceed the IHT threshold in any seven year period. After a seven year period you may then set up a new UAPT as the assets within your initial UAPT will have fallen out of your estate for tax purposes under current legislation.

Can I Access My Assets Within My UAPT? You can access your assets at any time as long as you have mental capacity. If you should lose mental capacity then your Trustees will manage your assets on your behalf. What If My Wife/Husband Is Already In Care? You should set up your UAPT as soon as possible. You should protect your share of the family home by placing this into your UAPT. If you should die and your surviving spouse is in care, your UAPT will protect your share of your property from passing to your surviving spouse. This prevents your share becoming available to the local authority and being used towards your surviving spouse’s care fees. What Are Trustees For? It is a legal requirement for a Trust to have Trustees to manage it. Trustees are legally obliged to act in the best interests of the beneficiaries.

Trustees should have adequate Professional Indemnity insurance in place to ensure that the beneficiaries are protected against possible loss. We have £5 million Professional Indemnity insurance in place and if required can provide professional and impartial Trustees to administer your UAPT and you can be sure that your affairs will remain confidential at all times. Can Anyone Set Up A UAPT? Yes, as long as you are over 18 years of age and have full mental capacity to understand what you are doing. Is There A Time Limit For My UAPT? Currently English legislation allows for your UAPT to last for up to 125 years protecting your assets for you during your lifetime and then for your chosen beneficiaries after your death.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

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Frequently Asked Questions (continued)

When Is The Best Time To Set Up My UAPT?

What If I Want To Move House?

The simple answer is as soon as possible. You never know what is around the corner or if you will lose mental capacity. Your UAPT gives you comprehensive asset protection throughout your lifetime.

You can move home whenever you want to do so. We need to know as soon as you make the decision to move house and our approved associate Solicitors can take care of all of the legal work for your sale and purchase at competitive rates. We can ensure that your new home is fully protected within your UAPT.

You should not set up your UAPT if you know you are about to go into care as this is likely to be viewed by the authorities as deliberate deprivation of your assets. Doing this will not work to protect against payment of care fees. You can still protect your assets against other considerations. Together with our associate approved Independent Financial Advisers we may also be able to arrange for the income from the assets in the Trust to meet some or all of your care fees whilst still protecting your capital and assets where possible.

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What If I Still Have A Mortgage? Not a problem, your equity within your home is protected as opposed to the property itself. Mortgage providers have a first charge on the property and this is recorded at Land Registry. Most lenders will allow you to protect the remaining equity in your home after allowing for the loan amount to be protected.

Legal & Contract Services Ltd are part of the LCS Legal Services Group Ltd and are specialists in all aspects of estate planning.

What About Equity Release?

What About Inheritance Tax?

You will need to meet the standard criteria that the Equity Release provider requires and as with a mortgage they will register a first charge against your property. We will look to protect the equity which remains yours in the property. With Equity Release the loan against your property increases with the interest that is added but your UAPT will protect the difference between the value of the property and the Equity Release loan balance.

Depending upon the size of your estate when you die, Inheritance Tax (IHT) may or may not be payable. If you have placed over the Nil Rate Band (NRB) into your UAPT, you would have paid some tax at that time which would have been 20% - half of the current 40% IHT rate. However, if you kept your UAPT level below the NRB then tax will not be due on the Trust assets. Tax may be due on any assets outside of your UAPT depending upon their value.

What About My House Insurance?

What About Other Costs?

Whilst it is important that you inform your Home Insurance provider it is not usually a problem because Insurance providers regularly provide cover for Trust properties.

Apart from any accountancy work required there is usually only the cost of completing the annual tax return as required by HMRC and payment of any tax due.

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Additional Information: OTHER SERVICES • Wills • Lasting Powers of Attorney • Funeral Plans • Advance Directives • Ordinary Powers of Attorney • Court of Protection Applications • Probate

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MON E GUA Y BACK RAN TEE

Our Guarantee LCS is confident that the service we provide will definitely save you and your family thousands of pounds. However, if after your death your family find that we have not saved you at the very least more than the cost of the service we have provided then we will refund our fees in full.

LCS TERMS OF BUSINESS Legal & Contract Services Ltd detailed Terms and Conditions are published separately and are included with every Contract and Agreement. Every Client who chooses an Ultimate Asset Protection Trust will receive an LCS Terms and Conditions brochure with their documents.

For more information please visit us at: www.lcslegal.co.uk. Alternatively you can phone: 0845 017 8250 or email: [email protected]

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