Some will writers and online adverts sell a "family protection trust" as a way to keep your home safe from care fees. The council rules don't work that way, and families can find that out when it is too late to change anything.
What the council guidance says
The national guidance that councils follow in Scotland, Charging for Residential Accommodation, deals with this directly. If the council thinks you gave up an asset to reduce your care home charge, it can treat you as still owning it. The guidance calls this deprivation of capital.
Its list of examples includes two that matter here. One is money put into a trust that cannot be revoked. The other is transferring the title deeds of a property to someone else.
The test is purpose, not just timing
Avoiding the charge doesn't have to be your main reason. The guidance says it must be a significant one. And it is for you to prove that you no longer have the asset. A trust deed or a deed of gift is the kind of evidence the council expects to see.
There is no fixed look-back period. The guidance says deprivation can be considered for assets given away at any time. What counts is why you did it and what you knew.
The guidance does recognise that timing matters to purpose. Someone who was fit and healthy, and could not have foreseen moving into a care home, is unlikely to be treated as having acted to avoid the charge. It gives an example the other way. A man with £18,900 in a building society buys a £10,500 car two weeks before entering a care home, and gives it to his son. If he knew he was about to be admitted, that is deliberate deprivation.
What happens if the council decides you did
The council assesses you as if you still owned the asset. That value is called notional capital, and it counts toward the £36,750 limit in our guide to the care home cost cap. It then reduces each week by the extra you pay because of it.
If the asset was transferred within six months before you entered the home, or while you were there, the council can also look to the person who received it for the charges that result. The guidance cites section 21 of the Health and Social Services and Social Security Adjudication Act 1983.
So a home put into trust can end up in a worse position. The family has lost control of the house, and the council still counts it.
What trusts are good for
Trusts do real jobs. A liferent trust lets a surviving spouse use the home for life while the capital passes to your children, as set out in our guide to the liferent trust. A discretionary trust can protect an inheritance for a disabled relative. A trust can also keep money away from young beneficiaries until they are older.
Those reasons stand on their own merits. Using a trust mainly to shield assets from the council is a different thing.
A trust set up by someone else is a different case. If a relative leaves you money in a discretionary trust, the guidance says that capital is not treated as available to you just because you could ask for it. The wording of the trust and what you receive from it still matter.
What to do instead
Plan early, with the numbers in front of you, and keep a written record of why you made any gift or transfer. Put a power of attorney in place so someone can act if you can't. Take advice before moving anything. Our guide to giving away assets to avoid care fees sets out the rules in more detail, and our long-term care planning service looks at what is sensible for your family.
Richard arranges trusts through our specialist legal partners, drawn up for a reason you could explain to a council or to your children.