Transition of Power
The transition of power in the UK this Monday, July 20, 2026, when Andy Burnham officially assumes the office of Prime Minister, naturally brings questions about potential policy shifts.
As estate planners, we are tracking how such political changes—specifically potential reforms to taxation and property—might intersect with the estate planning strategies we recommend to our clients, such as property trusts.
The Political Context: Potential for Tax Reform
The new administration is taking power during a period of economic pressure.
Analysts have noted that with limited options for raising revenue, further tax increases under the new government seem "inevitable".
Crucially, this environment has led to speculation about "fundamental reform" in areas of the tax system, with the taxation of property frequently cited as a potential target.
This means many of our clients have expressed increased concernabout how future government policies could impact their primary assets.
Property Trusts and Asset Protection
While clients often inquire about property trusts as a method to "protect" a home from care home fees, it is vital to balance this with the reality of current regulations:
The "Care Fee" Misconception: It is a common myth that putting a home into a trust is a guaranteed way to avoid care home fees. Local Authorities have the power to view such transfers as a "deliberate deprivation of assets" if they believe the primary purpose was to avoid paying for care - it is essential that there are other reasons such as protecting beneficiaries from losing part or all of their inheritance through divorce or bankruptcy and to avopid generational inheritance tax for example, reasons we alwys cite within our clients' Trust declarations, and of course, it is essential at the point of setting up the Trust that no medical diagnosis has been given to a client regarding them having a condition that would mean they could reasonably expoect to go into care in the future.
Legitimate Uses: Trusts remain valuable tools for estate planning though if set up correctly, specifically for protecting a spouse’s right to reside in a property while preserving the capital for children or other beneficiaries.
If clients are worried about how the new Prime Minister's policies might affect their estate, you we would advise as follows:
1. Flexibility: Ensuring Trusts are established for genuine estate planning purposes (like family protection) rather than solely for the avoidance of care fees, which helps defend against "deprivation of assets" claims;
2. Professional Advice: Since tax laws and government policies are subject to change, ongoing review ofyour estate plan is essential to ensure it remains efficient under the new leadership;
3. Holistic Planning: We strongly recommend the use of Lasting Powers of Attorney alongside Trusts to ensure that financial decisions are managed by trusted individuals if you lose mental capacity.
If you would like to review your planning now, just call us FREE on 0800 668 11 64
Remember the motto of the Scouts - which has stood the test of time “BE PREPARED”