Families are being misled into paying for protection from care fees and reduced Inheritance Tax (IHT) through asset protection schemes that ‘don’t deliver’, and offer ‘false promises’ according to the Association of Lifetime Lawyers.
The body which represents lawyers who support older people and those in vulnerable circumstances have issued a stark warning about the growing threat of trust mis-selling, as a member survey reveals people in vulnerable circumstances – particularly older homeowners, are being aggressively targeted by unregulated firms selling ‘complex and often worthless’ schemes. They say there is growing evidence of people being misled into paying thousands of pounds for so-called ‘asset protection trusts’, often disguised as ‘asset preservation trusts’, ‘family protection trusts’ or ‘flexible trusts’, as a way of shielding families from paying for care fees or reduce inheritance tax liabilities.
However, in reality, such schemes are often misused, offer no real protection and can backfire by triggering unintended legal and tax consequences, exposing families to lasting financial and legal harm.
A survey of members revealed more than 4 in 5 (82%) say their clients were misled into thinking the trusts would protect their homes or reduce tax, and most victims paid between £3,000 and £5,000 for having complex legal products drawn up, when they didn’t fully understand what they were signing up for and that offered no legal protection. Concerningly the body says 89% of the cases identified involve unregulated providers, with two-thirds of the firms behind the sales operating entirely outside any regulatory oversight.
The Association of Lifetime Lawyers has begun a consumer campaign aimed at educating people on the pitfalls of improperly advised and executed asset protection trusts. The research identified nearly three in four (70%) of those affected are older homeowners who either own their homes outright, or have significant equity. The damage caused by these schemes can be deep and long-lasting said the Association. Four in five (82%) of lawyers surveyed said the firms selling trusts had appointed themselves as trustees, often without the client’s full knowledge or consent. Three in four reported clients had suffered financial loss, while a similar number had seen families experience emotional distress or conflict.
The Association has produced a red and green flag guide to help consumers make informed choices. In it they say common themes in cases of mis-selling include
- Lack of proper explanation or documentation
- Inappropriate use of trusts in place of regulated advice
- Absence of informed consent, clear understanding, or independent legal checks
- Growing public confusion over what a trust can and can’t achieve
- Lack of understanding of the immediate and future tax consequences
- A total loss of control over the consumer’s own assets
- Encouraging consumers not to use regulated providers on the basis they will be more expensive
“This is a consumer protection issue hiding in plain sight. Those in vulnerable circumstances, many facing illness or bereavement, are being sold costly, complex products they don’t understand, with little or no access to help when things go wrong. Families believe they are protecting their home or inheritance, but instead they’re buying into schemes that are legally risky, poorly explained, and often completely unsuitable. We’re seeing people part with large sums of money on the promise of security, yet they’re buying into risk and uncertainty. This not only can lead to financial losses and unwieldy legal costs, but also unnecessary family conflict, emotional stress, and in some cases loss of access to their properties.
said Jade Gani, chair of the Association of Lifetime Lawyers.
10 responses
Nothing changes
Surprise surprise
How do you stop unregulated unqualified sales commission hungry Will Writers who work for companies big and small. One minute they are selling vaccine cleaners or double glazing the next they are pretending to be a Lawyer.
The only way to stop this scandal is to regulate.
Just like prepaid funeral plans ban the selling.
Don’t stop Trusts which are a wonderful historic product used by the knights Templers.
They should only be handle and written by Trust Lawyers. Trustees must be family members.
Only when they are drafted by lawyers and presented by properly trained professionals with the mandatory qualifications no commissions will the scammers be stopped.
On 50 years of being a Chartered Financial Planner and a Fellow of the Institute of Paralegals and the SWW ow TW and Probate I have never seen one of my professionally drafted Trusts fail or cause problems. Of course they won’t because I walk away from inappropriate recommendations.
Sorry to rant
Peter
I’m not sure about that. I think some of most horrendous examples I’ve seen of mis selling are from regulated firms. A lot of unregulated firms will sell these and work with a regulated 3rd party to draft and facilitate them.
Obviously, there are no solicitors involved in this.
Or are there?
I thought Trust HAD TO BE DRAFTED BY A SOLICITOR OR BARRISTER.
So perhaps fee hungry barristers or solicitor are just a tiny bit at fault by allowing and indeed facilitating and encouraging this to happen?
I do think Trusts are wildly oversold, but maybe the producers should take responsibility for regulating the supply – they are already regulated and clearly all should be concerned about the end user?
Unregulated firms tend to use 3rd party firms who are regulated to facilitate these arrangements.
I built this tool for anyone who asks me about them https://www.astutewills.com/lifetime-trust-calculator/ it’s based on the Society of Will Writers guide lines and thanks to this I’ve not setup a single asset Protection trust 😆.
I watched the BBC News article this week on poor advice in relation to trusts and listened to BBC Radio 4 Money Box on the same. Whilst the industry needs to have a close eye on consumer best interests, can we please think about the impact this has on the vast majority of highly competent, value centred and effective professionals. The berating of ‘so called non-qualified’ advisers is becoming a regular theme and sometimes for the right reasons. Nobody wants rogue operators in the profession. Like so many longer-term members, have been an IPW member for twenty years and have provided circa 4,000 clients and their families with advice and effective solutions. The IPW have a rigorous code of practice and one which is intended to protect the consumer. Any member will tell you it comes with responsibilities. We so called non-qualified professionals have something called high levels of knowledge and experience as well as examination certificates enough to decorate the walls of a medium-size house, as well as hundreds of hours of CPD training hours. I note at least two articles written by Todays’ Wills and Probate where solicitors have been struck off for misdemeanours and I personally have managed cases where the advice from a solicitor has been negligent and sometimes leading to significant loss for beneficiaries and a law degree or diploma does not always constitute best practice.
We need to continuously find language which moves the profession toward higher standards without publicly directing criticism to the professionals who are doing very good work under difficult conditions.
It’s about time.
The Society of Will Writers published guidance on this very subject months ago, which few were prepared to support at the time.
Our members are expected to dispel the myths around lifetime trusts and not promote them on the basis of unrealistic claims such as protection against care fees.
See here: https://www.willwriters.com/blog/apt-guidance/
I remain open to speaking and collaborating with any organisation or professional willing to stand against bad practice and work towards protecting consumers.
I agree with Mr Young I have never sold a lifetime trust have had clients that have been told they will not have to pay care feescits rampant in the country at the moment it wants stopping and also charging clients 3 000 pounds
There are plenty of TikTok/Facebook trust sellers at the moment. Especially prevalent is some mustachioed American, with a penchant for a taking videos inside stately homes. I checked out his company and not a single registration with any regulatory body. No doubt he’ll fill his trusty boots and fly back to the US of A when the fallout starts, some years hence.
I want to share some details about a Trust mis-selling by an unregulated estate planning company (Ltd), to see if anyone can offer some advice; as follows:
1. My parents clicked on an online advert for a Will priced at £19.99 (clickbait). NB: They ‘ONLY’ wanted to buy the advertised Will priced at £19.99.
2. A salesman called at their home and recommended two Wills to act as a Mirror Will.
3. The salesman added four more products as he deemed necessary, and my parents reluctantly agreed (under pressure), as follows:
a. x2 Health and Welfare Lasting Power of Attorney documents (unrequested/unwanted). These documents were not registered with OPG, and my parents did not understand.
b. x2 Property and Finance Lasting Power of Attorney documents (unrequested/unwanted). These documents were not registered with OPG, and my parents did not understand.
4. The salesman then added seven more products without my parents consenting, realising, or understanding:
a. x2 Family Probate Preservation Trust documents (unrequested/unwanted).
b. x2 Memorandum of Wishes documents (unrequested/unwanted).
c. x2 Trustee Resolutions (unrequested/unwanted).
d. x1 Declaration document (unrequested/unwanted).
5. My parents were coerced into signing documents they had not read, or understood, by the salesman who repeatedly called at their home.
6. My parents were hit by a surprise bill, £5000 approx.
7. Finance was arranged by the salesman because my parents could not afford the surprise bill.
8. The company was registered with FCA, so an arranged finance plan was possible.
9. The Mirror Will was drafted incorrectly and left £25,000 to the wrong charity.
10. The Mirror Will was not fit for purpose, and a new Will had to be drafted with a new company (SRA regulated and of our choosing).
We have been trying to get their house and assets back for years, but to no avail. Any advice would be welcome.