Such gifts will completely fall out of account for inheritance tax purposes if we survive them by seven years.
Such trusts have been available for several decades and are well known and accepted by HMRC. However, the careful wording of these trusts can achieve the best of both worlds – delivering care costs, if and when they are needed, but earmarking inheritance tax-exempt legacies with any balance of trust assets then remaining to be passed to beneficiaries free of inheritance tax.
Based on all the research on care costs, it would therefore appear that a trust fund commencing at £325,000 is likely to cover the most luxurious of care homes for even the most long-lived.
Paul Wilcox is chairman of The WAY Group