Why you shouldn’t use Asset Protection Trusts to avoid care fees 

October 6, 2025
Amy Lane

Partner

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Trusts to avoid the payment of care fees are a hot topic at present, particularly following the report by the Society of Trust and Estate Practitioners ‘Buyer Beware’ and the Association of Lifetime Lawyers calling for greater public awareness of these structures.   

Understandably, as the population ages and long-term care costs continue to rise, many families are looking for ways to protect their assets from being used to fund care. One strategy that has grown in popularity is the Asset Protection Trust (APT), often marketed as a way to “ring-fence” wealth from care home fees. While these arrangements may seem appealing at first glance, using APTs to avoid care costs carries serious legal, ethical and financial risks. 

In this article, I will explore why they are not the magic solution they are often sold as, and why clients should be extremely cautious before going down this path. 

What is an APT? 

An APT is a trust where individuals transfer assets (usually their home and sometimes other assets), with the intention of keeping them outside their estate for means-tested assessments, particularly for local authority-funded care, but quite often for the payment of private care. In many versions of these trusts: 

  • The person continues to live in the property (if it’s the main home), 
  • They may retain some benefit or control (as a trustee or beneficiary), 
  • The trust is structured to try and avoid counting the asset for means testing. 

It is marketed as a way to avoid care fees and other things, such as probate fees.  

Do they work to help avoid care fees? 

No. The core issue with these arrangements is the deliberate deprivation of assets. The person transferring the asset into the trust continues to derive a benefit which is caught by anti-avoidance legislation.  If a Local Authority deems you have deliberately deprived yourself of an asset to avoid care fees, they will treat you as still owning the asset, so the value of the house is still taken into account as part of the assessment for care.   

There are various other issues, such as loss of autonomy.  For instance, if you want to sell your home which you have transferred into the trust, you lose the right to make that decision.  It is for the trustees of the trust to make that decision and, whilst you may be one, you would need all of their agreement and cooperation.   

The other thing to note is that there have been some companies selling products like this where the directors of the company have gone to prison for incorrectly managing clients’ funds.   

In summary, you might pay for an expensive trust and still be required to pay full care fees. 

Are there other options? 

It is worth considering the options where you are married and particularly whether a trust on first death could be useful to protect the estate of the first to die from redirection through a conscious decision or otherwise.  

Do APTs work to reduce IHT? 

No, and can sometimes increase the overall IHT liability. This is because transfers to a trust over a certain amount will trigger an immediate IHT charge.  Bear in mind too, trusts are subject to their own IHT regime every ten years and when assets leave the trust. They require proper administration, which impacts on the costs involved too.   

Does it avoid needing probate? 

Potentially. It would remove the need for probate to sell your home, as the surviving trustees could sell it after your death. However, probate may still be needed after your death to be able to deal with your other assets such as bank accounts, investments etc.  

Conclusion  

Although APTs may be marketed as a smart way to avoid care costs, the legal reality is very different. Local authorities are well within their rights to challenge these arrangements, and increasingly do so.  If you are considering setting up a trust for care reasons, it’s essential to seek independent legal and financial advice, and to be wary of off-the-shelf solutions that promise more than they can deliver. If you have already set up one of these trusts, it is equally important to review them sooner rather than later.   

Want to learn more? Contact Amy Lane here.  

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