The Daily Telegraph recently reported on families being put at risk by unregulated firms promising to help them avoid care fees and inheritance tax.

The Telegraph reported that lawyers and other professionals such as financial advisors are increasingly concerned that the public are being persuaded to pay extortionate fees for trusts which are not appropriate for their circumstances and may not work.

Some schemes involve putting family homes into trust to avoid care home fees. The complex trust rules are being overly simplified in ‘high pressure’ seminars targeting potentially vulnerable people who are being told what they want to hear. However, in some cases attempts to avoid care fees could fall foul of the law.

Under current rules, councils will pay all or part of the cost of care if the person’s assets are below £23,500. If the person moves into care leaving their property unoccupied, the property is taken into account as part of a financial assessment to determine the individual’s contribution to their care.

However councils have powers to chase individuals for payment under ‘deliberate deprivation’ rules where they can prove that someone has deliberately reduced their assets with the intention of claiming financial assistance from the council.

Other schemes offer to limit inheritance tax liability through similar measures, again often for very high fees. Sometimes these schemes ignore the fact that the individual would have no inheritance tax liability in the first place.

Also, putting property into trust can cause problems with mortgage companies and equity release firms who are unwilling to lend money against properties held in trust.

Sadly, lawyers do see clients who have encountered significant difficulties with trusts set up under this type of scheme, including trust schemes going bust leaving untraceable professional trustees in charge of their homes.. Unfortunately, some of these clients have paid a small fortune in fees to be left with a major legal headache which could have been avoided by seeking proper legal advice.

Our advice:

There are legal, cost effective methods of protecting some of the value of your home. Consult a qualified lawyer at a regulated firm of solicitors. We will charge you far less than a trust company and will provide you with sensible advice tailored to your circumstances and needs. We will only undertake work on your behalf that is necessary, legal and appropriate for you.