Recognise the asset protection trust red flags
Asset protection trusts are a legitimate way to manage your estate to make sure your money goes where you want after your death. However, in recent years, more people in vulnerable circumstances have been mis-sold schemes that fail to protect their basic interests. Worse, these schemes can lock them into a cycle that costs thousands of pounds, as well as potentially adding devastating legal consequences.
Protection or false promise?
An asset protection trust is a tool used to pass an estate to beneficiaries quickly and tax efficiently. Used correctly, it has the added benefit of making the process of inheritance simpler for your loved ones.
Sadly, a worrying number of falsely advertised asset protection trusts (sometimes referred to as ‘family protection trusts’ or ‘flexible trusts’ schemes) are misleading victims and mis-selling the promise of protection, whilst in fact providing wholly unsuitable products. Research1 shows that people in vulnerable circumstances, especially older homeowners are at higher risk of being aggressively targeted.
The warning signs
If you are considering a trust arrangement, it is important to check for red flags, and ensure you are certain what you entering into.
Unfounded and overinflated promises about reducing inheritance tax liabilities or protecting your home can be signs of a dodgy scheme. One especially prevalent mis-selling technique is the promise that entering into a trust will remove the burden of care fees.
In reality, such schemes are empty words. The effect of these false promises is that families are left facing unexpected tax liabilities and potential legal consequences. In some cases, this can even lead to loss of control over property, as well as all the emotional distress that comes with that.
Avoid unregulated providers
Another significant indicator that you are being mis-sold an asset protection trust is when it comes from an unregulated provider. Nearly all cases of dodgy asset protection schemes are sold by unregulated providers.
Whereas genuine law firms must comply with rigorous rules on regulation and customer protection, unregulated providers often fail to meet even basic standards. Notably, unregulated providers are not required to have insurance to cover negligence, and they do not typically have sufficient compensation funds available to cover any negligent services provided.
The human touch
Behind every victim of mis-sold asset protection schemes there is an individual or family who will suffer the financial, legal and emotional consequences.
Proper estate planning is a holistic process, not a quick fix with miracle results. A fully regulated law firm will consider your personal circumstances and provide a clear breakdown of costs at the outset.
Getting the right arrangements for passing on your wealth after you are gone is one of the most sensitive topics in estate planning. At Attwaters, our Wills, Trusts & Probate team are proud to provide every client with outstanding personal service and communication, as well as unrivalled industry knowledge.
Our team of legal experts can help you consider the full range estate planning options. For transparent service and dedicated advice from specialists, email us at wills@attwaters.co.uk, or call 0330 221 8855.
