Families are paying up to £5,000 for misleading asset protection schemes that don’t deliver, and offer false promises of shielding them from care home fees and tax liabilities.
People across the UK are being misled into paying thousands of pounds for so-called ‘asset protection trusts’, which are often disguised as ‘asset preservation trusts’, ‘family protection trusts’ or ‘flexible trusts’ that promise to shield them from paying for care fees or reduce inheritance tax for their loved ones. However, in reality, such schemes are often misused, offer no real protection and can backfire by triggering unintended legal and tax consequences, exposing families to lasting financial and legal harm.
James McMullan, Partner and Head of Private Client, is today issuing a stark warning about the growing threat of trust mis-selling, as new research reveals that people in vulnerable circumstances – particularly older homeowners – are being aggressively targeted by unregulated firms selling complex and often worthless schemes.
Often falsely marketed as a way to avoid care fees or reduce inheritance tax, the majority of specialist lawyers surveyed (95%) confirm having encountered cases of trust mis-selling.
And, in the last year alone, members have noticed an increase, with three in four having advised multiple clients who have been mis-sold these schemes, with nearly three in four (70%) being older homeowners who either own their homes outright, or have significant equity.
Alarmingly, more than 4 in 5 (82%) say their clients were misled into thinking the trusts would protect their homes or reduce tax, and most victims paid between £3,000 and £5,000 for having complex legal products drawn up, when they didn’t fully understand what they were signing up for, and that offered no legal protection. What’s more, the majority (89%) of these cases involved unregulated providers, with two-thirds of the firms behind the sales operating entirely outside any regulatory oversight.
James warns that the damage caused by these schemes can be deep and long-lasting. Four in five (82%) of lawyers surveyed said the firms selling trusts had appointed themselves as trustees, often without the client’s full knowledge or consent. In parallel, three in four reported clients had suffered financial loss, while a similar number had seen families experience emotional distress or conflict.
James said: “Families are being sold expensive, complex trusts that promise protection but often deliver the opposite. Instead of security, people are left facing financial loss, stress, and even the risk of losing access to their own homes. There is no one-size-fits-all answer to care planning or inheritance. That’s why it’s vital to seek advice from a properly qualified, regulated professional you can trust, and if you’ve already been caught in one of these schemes, there are ways out; we can help.”
The Association is calling for increased consumer awareness, stronger regulation of unregulated firms, and for more people to seek advice from regulated experts in later-life planning, before agreeing to complex trust arrangements.
About the Author
James McMullan is a Partner and also heads up our Private Client team. James started his career as a family lawyer, but over the years, his practice has grown to encompass all aspects of private client law, including estate planning, Inheritance Tax, lasting powers of attorney, lifetime gifts, living wills, mental capacity issues, probate and contentious probate, trusts and, of course, wills.
James prides himself on spending sufficient time with clients at the outset of a matter to fully understand their position, needs, and objectives. He is committed to resolving disputes effectively, frequently using alternative dispute resolution (ADR). Given its costs and uncertainty, court litigation is a last resort.