Legal expert warns of unregulated advisors targeting affluent UK market towns.

12 February 2018

Affluent market towns and seaside resorts are a prime target for unregulated advisers promising to help people avoid care fees and inheritance tax, a legal expert has warned.

Wilkin Chapman solicitors has added its support to warnings about unregulated firms, which are operating across the country.

Daily Telegraph Money reported this week how it has seen marketing flyers in a south coast seaside town encouraging consumers to set up a trust for £99 plus VAT to ‘help prevent your home being sold to pay for your care’. It reports how such methods are concerning professionals, who say people may be convinced to pay for schemes to cut IHT and care fees, such as placing family homes into trust.

Lucy Butterfint specialises in elderly private client issues at the Firm, being a member of the Society of Trust & Estate Practitioners and Solicitors for the Elderly. She recently revealed how two elderly female clients in the region had been sold unsuitable family trust and will packages by an unregulated adviser operating in Beverley, East Yorkshire.

She managed to retrieve £7,000 for the pensioners – the money they paid out to purchase the packages.

Ms Butterfint explained how the ladies had handed the money over, but they became concerned about the Trust package sold to them and contacted her office. As they were still in the ‘cooling off’ period, they were able to cancel the arrangements, but it took four months to get the money back.

“Unregulated advisers and companies will cold call people or hold events, with the more affluent areas or towns popular with older people being heavily targeted. They will then advise people to set up trusts and charge between three thousand and five thousand pounds up front for doing so,” she explained.

Once sold, the expensive packages will most likely not protect the client in the way they were told, said Miss Butterfint. She warned that many will lead people to believe it will protect their homes if they need long-term care, when in fact that is not the case if done for that purpose.

“Unfortunately, anyone can call themselves a legal adviser and write a Will or sell a Trust package, claiming they have expertise with no legal qualifications at all.

“I cannot stress enough the importance of people seeking advice from a regulated solicitor. For many people we are talking about their lifetime’s savings or assets and they need to be properly looked after,” she added.

The Daily Telegraph’s article focused on marketing flyers which had been distributed in popular market towns on the south coast of Britain. The activity led to legal professionals in that area warning how unregulated firms were trying to attract potentially vulnerable people – ‘telling them what they wanted to hear’.

They went on to warn how such trusts may not only be ineffective, but also open people up to criminal charges. Under ‘deliberate deprivation’ rules, local authorities have powers to chase individuals who they believe have deliberately reduced their assets with the intention of claiming state help.

Under current care rules, councils will pick up some or all of the cost of care where the patient’s assets fall below £23,500.

It is also a concern that some firms may be pushing inheritance tax avoidance schemes even where there is little to no risk of the family breaching tax-free amounts. Since April 2017 an additional IHT allowance relating to family homes means a couple can potentially pass on £850,000 tax free. By April 2020 this will rise to £1m.

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