Member Article

Pensioners warned: Be wary of asset protection trusts

Leading North West law firm Kirwans is warning people to act with caution against fraudsters selling so-called ‘asset protection trusts’ in a bid to shelter their property and assets from care home costs.

This warning follows the sentencing of eight people at Nottingham Crown Court for mis-selling asset protection trusts to elderly clients. Trading under the names Inheritance Protection Services, Inheritance and Probate Solutions, and Goldstar Law, the Nottingham defendants took more than £250,000 in client fees over the course of two years, despite their lack of legal expertise.

The trusts are advertised as a means for homeowners to protect their property against local authority charges should they have to go into residential care. The schemes offer to place assets, such as property, into trust for the benefit of someone other than the home owner in efforts to avoid a local authority from charging care fees.

Currently anyone with assets of over £23,250 has to pay the full cost of their care, meaning that most property owners will be liable to pay for care, even if it means having to sell or rent out their property to raise the funds. Most people fear having to sell their homes to pay for care, preferring to pass it on to their children.

John-Paul Dennis, Partner and Head of Private Client at Kirwans said: “This emotive issue is leading increasing numbers of people, many of whom are elderly or vulnerable, to fall victim to fraudsters peddling such trusts, under the misconception that a property placed into trust is not regarded as the settlor’s asset for means-testing purposes.

“Often these trusts don’t deliver what they promise; they can be drafted incorrectly without any true regard or knowledge of trust law and the local authorities are usually entitled to disregard the trust when assessing the individual’s assets, under the deliberate deprivation of assets rules.”

Aggressive sales tactics and high advance fees, which can run to several thousand pounds are common amongst the unregulated companies mis-selling the trusts. Fraudulent firms can also unlawfully offer the reserved legal activity of preparing the trust documents. Sadly, many of these services fail to deliver which can leave the person at the heart of the matter with greater financial uncertainty.

John-Paul, said: “These organistions are certainly not new to the sector, they have been around for some time. However, the recent sentencing of a number of fraudsters only highlights further how easy it is for such organisations to trade. We have for some time raised concerns of these services and have advised a number of clients who have been targeted by fraudulent companies purporting to be able to protect their property assets.

“What can sound like a sensible and feasible way to avoid costly care fees, more often than not ends up being a fraudulent, hollow arrangement, with no sound legal foundations that can result in a significant financial loss and without any legal recourse. These companies can also aggressively sell will writing and power of attorney services so that the total charges associated with these sorts of trusts can cost several thousand pounds.

“It’s crucial when planning ahead to look for qualified legal expertise. A qualified solicitor is best placed to offer advice and guidance on all the different facets of planning for care and inheritance. It’s important to effectively manage your assets and avoid becoming ensnared in these dubious schemes.”

This was posted in Bdaily's Members' News section by Henry Roberts .