Will This Be The Next Mis-selling Scandal?

Promises from slick marketing campaigns that by putting your property and assets into a trust you can avoid care home fees and Inheritance Tax (IHT) are all over the local and national press.

Several companies are currently running high profile marketing campaigns targeting people concerned about their wealth being chipped away by care home fees and IHT. Often termed in the adverts as ‘Asset Protection Trusts’ or ‘Family Protection Trusts’, this type of trust has been around for many years but has been given a ‘marketing makeover’ by these companies, who are eager to cash in on worried consumers, often charging several thousand pounds to set one up. In fact, in our opinion, this type of trust may only be suitable for the circumstances of around 5% of the UK population.

The companies often name themselves as Trustees on the Trusts they establish meaning that they then own and control the assets within the Trust; for instance, if you put your house into the trust, then the company directors (as the Trustees) own your house. It isn’t possible to end the trust without their consent and in order to give that consent many will charge a fee of several hundred pounds for meetings and further charges will be made should the Trustees retire from the Trusts.

Why Don’t These Trusts Work?

If you need to go into care in the future a local authority could decide you should pay for your care anyway because by putting your assets into the trust you have ‘deliberately deprived’ yourself of capital which could have been used to meet the costs.

How Are They Getting Away With It?

The provision of advice around Will writing and estate planning is not regulated by a professional body; the scheme these companies are marketing is not illegal but would only be suitable in a very limited percentage of cases.

If you are considering whether a trust would suitable for your situation, you should seek advice from a regulated professional with appropriate qualifications.

It is advisable to use a provider who is regulated such as a Solicitor or a member of the Society of Trusts and Estates Practitioners. Solicitors are regulated by the SRA and are required to have professional indemnity insurance. If the firm you used to make your Will no longer exists, then your documents will still be safe as the SRA will ensure all matters are passed to another Solicitors’ firm. Anyone can call themselves a ‘lawyer’ but only Solicitors with practising certificates issued by the SRA can legally use that term.

If you would like to talk to us about how we can help you please contact Rebecca Head or Joanna Parkin on 01543 440 308 or use the contact form on our website https://www.fouroakslegalservices.com/contact/