How Your Estate Allocation Trust Is Treated in a Care Fees Assessment

If the local council has arranged a financial assessment for care fees and there is an Estate Allocation Trust in the picture, this factsheet is for you. It sits alongside our Local Authority Care Fees: The Financial Assessment Explained factsheet, which explains the assessment itself: the capital limits, when the home counts, and the deprivation rules. Here we cover the part only we can: how the EAT, the lifetime trust available through Squiggle, fits in. The rules are as at July 2026 and apply to England (Wales has a different system).

Start from the right expectation

The most important sentence in this factsheet is this: the EAT was not designed to avoid care fees, and it does not hide assets from the means test. As our Estate Allocation Trust factsheet says plainly, a lifetime trust cannot be used to deliberately avoid care fees, councils can challenge transfers made with that intention, and there is no time limit on such a challenge.

What the EAT is designed for is different: protecting your Inheritance Tax allowances, sheltering your estate from the time and cost of probate, and protecting what you leave for the people who inherit it. Because you keep the right to benefit from the trust during your life, its assets remain part of your estate. That is a deliberate feature of the design, and it is also why you should expect the council to take the trust into account in a financial assessment.

What the assessor will see

The EAT holds each person's assets in their own fund, allocated across up to four sub-funds, and they are not all the same in a means test:

• The RNRB, TRNRB and surplus (“XS”) sub-funds are held on bare trust for you (the simplest form of trust, where your entitlement is fixed). In our own words from the EAT factsheet: the assets in these sub-funds “still count as yours”. Expect the assessor to treat them as your capital.
• The main trust fund is the portion in which you are the life tenant, meaning you keep the right to benefit for life, with the trustees holding discretion beyond that. The capital in this fund is held by the trustees rather than by you, but anything you actually receive from it is assessed as yours, and the council can also examine the circumstances in which assets went in. It does not follow that this capital is simply ignored.

How trust assets are treated is ultimately the council's decision on the facts, applying the Care Act rules. It depends on the trust's terms, what you receive from it, and the circumstances (including your health and expectations) when it was created. Neither we nor anyone else can promise a particular outcome, and anyone who does promise one is not giving you accurate information.

What to give the assessor

Trustees and families do not need to explain trust law at the meeting; the documents do the work. Hand over:

• A copy of the signed trust deed. It states the type of trust, the date it was made, the settlor (the person who put the assets in) and the trustees.
• The certificate of registration with HMRC's Trust Registration Service, from your closing pack.
• Recent trust bank account statements, especially if a property has been sold and the proceeds now sit in the trust's account.
• The Guidance to Trustees document, if the assessor wants detail on how the trust operates.

“Why did you set it up?”: answering the deprivation question

Because a lifetime trust involves transferring assets, an assessor may ask why and when yours was created. Answer openly. Your trust deed, our advice records and your closing pack all document the purposes for which it was made, and the date shows the circumstances at the time.

If the council suggests the trust was a deprivation of assets, don't panic and don't go silent. The council must consider whether avoiding care charges was a significant motivation and whether care needs were foreseeable at the time; it cannot simply assume. Contact us, gather the paperwork, and if you disagree with the outcome, use the council's complaints procedure and then the Local Government and Social Care Ombudsman. Independent advice (for example from Age UK, or a solicitor) is sensible for any disputed decision.

Same rules, different councils: four hypothetical outcomes

Every council applies the same national rules, but in practice assessors reach different conclusions on similar facts, and families should be ready for that range. The four families below are entirely hypothetical illustrations of approaches councils take. None of them predicts your outcome, and no trust arrangement should ever be bought, or kept, on the strength of the first one.

Arthur: the council leaves the trust alone. Arthur set up his EAT at 62, fit and well, with documented estate-planning aims. When he needs residential care at 79, his son provides the deed, the registration certificate and the trust statements at the first meeting. The assessor reviews the dates and purposes, raises no deprivation question, and assesses only Arthur's non-trust savings and income. A clean outcome, but one that can never be relied on in advance. This is a hypothetical example for illustration only.

Brenda: the bare sub-funds are counted, the discretionary fund is respected. Brenda's assessor works through the structure: the bare sub-funds (the RNRB, TRNRB and XS portions, which the trust deliberately keeps as hers) are treated as her capital, while the discretionary main fund is left out of her capital, with the payments she actually receives from it assessed as income. No deprivation finding is made. This is the outcome closest to how the trust is designed, and still not one anybody can promise. This is a hypothetical example for illustration only.

Charles: the council counts the surplus and questions the timing. Charles's council treats the XS surplus as his capital and, pointing to the timing of transfers made after his diagnosis, also assesses part of the main fund as notional capital (assets he is assessed as still owning). His family challenges through the complaints procedure with the advice records from the time; the council revises part of its decision but holds the rest. The family takes independent advice before deciding whether to go to the Ombudsman. This is a hypothetical example for illustration only.

Doreen: the council counts everything, and the family accepts it. Doreen's trust was set up when her care needs were already visible, and the council finds that avoiding charges was a significant motivation: everything in the trust is assessed as notional capital. Her daughters take advice, conclude the finding is realistic on the facts, and decide not to challenge. They arrange a deferred payment agreement so the fees are settled from the estate later, and the trust still does the job it lawfully could do: probate efficiency and protecting what remains for the family in due course. This is a hypothetical example for illustration only.

Four families, four outcomes, one set of rules. What the outcomes share is what the families could control: openness, paperwork, and early advice.

Common mistakes

Assuming trust assets are automatically ignored. They are not. Parts of an EAT count as your own capital by design, and the rest is assessed on the facts. Walk in expecting the trust to be looked at.

Applying the seven-year rule. It is an Inheritance Tax concept. For care-fee deprivation there is no time limit whatsoever.

Not bringing the trust paperwork. An assessment without the deed and the registration certificate stalls, and unanswered questions breed suspicion. The documents are your friends.

Keeping quiet about the trust. Failing to mention a trust the council later finds looks like concealment and undermines everything else you have said. Openness costs nothing; silence can cost a great deal.

Selling trust property without telling us. If trustees sell a property held in the trust, the proceeds must stay within the trust, and the paper trail matters in any later assessment. Speak to us before a sale so it is done correctly; our Trust Administration factsheet explains what running the trust properly involves.

Treating one family's outcome as a promise. Councils differ, and the four examples above are illustrations, not precedents. Plan on the trust being assessed, and treat anything better as a bonus.

Questions? Book a free call

If an assessment letter has arrived and you would like a second pair of eyes before the meeting, we're here. Pick a time that suits you and your local Squiggle consultant will call you. No charge, no obligation. Book a call or call 01233 659 796.

Talk to Squiggle: 01233 659 796 | hello@squiggleconsult.co.uk | www.squiggleconsult.co.uk | Book a free call: meet.squiggleconsult.co.uk

Trust planning should always follow personal advice.

This factsheet is general information for England and Wales, not legal, tax or financial advice. Last reviewed: July 2026.