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Things to consider when gifting assets

A guide to the implications of gifting assets or property, including the risk of incurring Capital Gains Tax, and information about lifetime trusts.
4 min read
In this article
Lifetime trusts or asset protection trusts Why consider a lifetime trust? Other things to consider about gifting assets

Lifetime trusts or asset protection trusts

The ownership of assets, such as property, antiques or other valuables, can be transferred through lifetime trusts while a person is still alive rather than giving them directly to a person. This is the opposite to will trusts, which only come into effect when a person dies. 


Assets are placed into a lifetime trust that is legally managed by one or more appointed trustees. Any amount of assets can be placed into a lifetime trust, but any more than £500,000 per person or £1m per married couple (2020-21) could mean that the assets are still included in your estate and liable for Inheritance Tax when you die.


On the Which? Money website we explain how the amount you can pass on tax-free includes an extra £175,000 per person (from April 2020) if your estate includes your home.


If you live for more than seven years after creating the trust, assets would not form part of your estate. The HMRC website has more information about trusts and taxes.

Use our calculator to find out how much you'll pay for care in your area and what financial support is available.


Why consider a lifetime trust?


There are several reasons to consider a lifetime trust. For example:

  • to pass assets on to a minor or someone with limited mental capacity who needs the help of trustees to manage their finances
  • to ‘protect’ assets from being included in the financial assessment for care costs.

But placing assets in a trust is unlikely to help you to avoid care home charges. When the local authority carries out the financial assessment for care, any assets that you have moved into a trust could be seen as deliberate deprivation of assets, meaning that their value may still be taken into account. This is explained further in our article gifting assets: what are the rules?


There are several other things to take into account when considering a lifetime trust.

  • Setup fees can be expensive.
  • You will lose ownership of your assets – although, you may be able to maintain some level of control if you have appointed yourself as a trustee.
  • Once the assets have been transferred to the trust, you can’t change your mind, give the money to someone else or spend it as if it was still your own. This could put you in a vulnerable position should you need funds later on.

Read more about will trusts and lifetime trusts on Which? Money.


If you’re thinking about setting up a lifetime trust it’s vital that you seek independent financial advice from a specialist accredited later life adviser, such as a fully listed member of the Society of Later Life Advisers (SOLLA). 


Society of Later Life Advisers (SOLLA)

By choosing an accredited member of the Society, you can be assured of someone with the expertise to best understand your needs to provide advice that is right for you and your family.

For advice and information, call:

0333 202 0454


Which? Money also has advice on how to find a financial adviser.

Other things to consider about gifting assets

  • It’s permanent: there’s no going back. Once you have given a gift to someone, you can’t change your mind.
  • Loss of financial security: assets might be needed for other unforeseen costs in the future. You might want to move house or pay for care at home services, for example. If you have disposed of assets, you might not have money when you need it for other things.
  • Loss of choice and control: reducing assets will leave you financially vulnerable and limit the choices you have in the future.
  • Situations/relationships can change: someone that you trust to ‘hold on to’ a valuable asset, or own your property ‘in name only’ and pass money to you at a later date, might not always live up to their end of the bargain.
  • Divorce/bankruptcy: you might give your house to someone on the understanding that they can stay living there. If the person receiving the gift gets divorced or goes bankrupt, however, the house may have to be sold to form part of a divorce or bankruptcy settlement. This could leave you homeless.
  • Capital Gains Tax: if you, or the person that you give the gift to, makes a profit from that asset you may be liable for Capital Gains Tax. This is often the case with second homes. Read Which? Money’s guide to Capital Gains Tax for more information.
Which? Legal
Talk to our legal team for personal advice on handing over your property and other assets to family or friends.

Further reading

Gifting assets: the rules

We explain the rules of gifting assets and transferring property, including the deliberate deprivation of assets.

Legal transfer of property

You can give your home to your children, even while you’re still living in it. But be aware of the complex rules.

Benefits for older people

Read about the benefits available in later life: Attendance Allowance, PIP, Winter Fuel Payment and more.

Last updated: 28 Mar 2020