Beware of Unregulated Trust Advisers

25 July 2017

You need to be aware that the recent local promotion of so-called asset protection trusts are being sold to you by companies who are not regulated by the Solicitors Regulation Authority and are providing ‘advice’ that is alarmingly inaccurate.

A typical example relates to an elderly couple, in their 70s or 80s, and with some pre-existing health issues which are not yet serious enough to require extra care at home or in a nursing home.

The couple were advised that if they were to transfer their home (and in some cases other assets as well) into one of these trusts then, after a mere 12 months, those assets will be untouchable if they require nursing home care in the future. Sadly, this is simply not the case.

Transferring assets in this way (or indeed by outright gift to family members) in the absence of other compelling reasons to do so, is in fact very unlikely to be effective to relieve the burden of future care home fees. Local authorities are entitled to treat such transfers as a ‘deliberate deprivation of assets’, and where deliberate deprivation has occurred, the local authority can assess an individual’s contribution to meet their care fees on the basis that they still owned that asset.

Furthermore, there is no time limit on how long ago a transfer needs to have taken place for it to be considered ‘safe.’ There is a 7 year rule which applies to gifts for Inheritance Tax purposes, but the same rule does not apply for the purposes of contributing to care fees. If the aim of the transfer was to try to circumvent the rules, the local authority is entitled to bring the asset in question back into the equation.

The moral of this is that if you are contacted by someone trying to sell you a trust arrangement that sounds too good to be true, it probably is! “ If you have received a call or have been contacted by someone trying to sell you a trust arrangement and you would prefer impartial, regulated advice which is tailored to your particular circumstances, please contact one of our Wills, Estates, Tax and Trusts team.


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