Asset-protection trusts 'mis-sold'
Published on 25 February 2013 11:30 AM
Tens of thousands of people have been mis-sold asset-protection trust schemes, with unscrupulous advisers suggesting they would protect a homeowner's property if they went into care.
The Daily Mail reported that workers approaching retirement and those who have already finished working, paid up to £10,000 for what is effectively a worthless piece of paper.
Regulators are now planning to take action against the advisers who are believed to have scammed millions of pounds by exploiting people's retirement fears.
From now on under new Whitehall guidelines, local authorities will adopt a tougher approach.
Trusts that have obviously been set up to help people avoid selling their home if they need long-term care will also be disregarded.
A instrument that dictates how properties are managed after a person's death
Asset-protection trusts have been around for a long time and they are used legitimately, along with a will, to make sure properties are managed and disposed of in line with a person's wishes after their death.
However, this was being lost in translation, with some advisers taking advantage of fears over the requirement that some people sell their homes to help pay for care services.
The Solicitors Regulation Authority explained that it is aware that the trusts have been mis-sold and it will collaborate with other regulators if necessary to resolve the issue.
Aris Nicolson, barrister with law firm Denning Legal, a reputable trust provider, emphasised that selling the trusts under the guise of saving healthcare costs in the future is wrong.
'Sold as such, this is simply not true, as this would constitute a 'deliberate deprivation of assets', he added.
Janet Davies, joint managing director of care-fees planning company Symponia, said: 'Trusts may be appropriate in some circumstances but these 'asset-protection farms' are absolutely terrible. Local authorities are looking at trusts very closely.'
Copyright Press Association 2013