Asset protection trusts are being heavily marketed at inflated prices as organisations cash in on the current trend for people to protect their assets and ensuring their families don’t get hit by later life care home fees. These groups are selling the trusts on the basis that solicitors’ trust handling fees are expensive.
In fact, solicitors fees in most cases are half the £3,000 plus VAT fee charged by some organisations, who also then insist on being appointed as their trustee and demanding an annual payment of around £200 plus VAT for the privilege. Even certain large charities that cater for the elderly have been drawn in by these organisations and are going on to recommend them to their target groups.
Another issue that can arise is that the client who is setting up the trust does not usually have the power to later remove them as a trustee because the trust document only includes the statutory provisions which give that power to the trustees themselves. This is something that I as a trust adviser always ensure my clients have the ability to do, so they are not tied to me or my firm for life, unfortunately some out there are not that scrupulous.
As more and more people seek to protect their assets and ensure that their families do not find themselves having to pay for their care home fees, trusts are becoming the popular way through. Unfortunately, certain organisations are charging exorbitant fees for setting up the trusts and then making sure they can collect an ongoing annual fee to be a trustee – something which is not necessary at all.
Yes, setting up trusts can be complicated because each individual has a different set of circumstances to the next, but the benefits are that they give peace of mind by making sure there is a steady income for the whole family and a protection where expensive care home fees are concerned. If you get the right advice, then there should not be any complications. Therefore, it is always best to go through experienced legal firms to make sure all the complex issues are covered. Your adviser must ensure that you as their client understand the implications of setting up a trust, and that you are also properly assessed to ensure they are not creating a problem for yourself later down the line.
Unfortunately, non-lawyers are not always aware of the pitfalls and even if they are don’t necessarily pass that information on to the person they are advising on setting up the trust.
At HCB we do not insist that the client appoints us as trustees so there is no annual retainer fee and we only charge for work that has to be done such as a tax return every five years and that would be around £100. And we give the power to remove and appoint trustees to the person setting up the trust.
Our service, like many other solicitors, not only means that the client is talking to a legal expert, but costs them less money and is more transparent - the exact opposite to how the get-rich-quick salesmen are portraying the legal profession.
This is however a growing fashion – the same issues surround DIY wills and internet divorces. The client will always be better off taking proper legal advice rather than taking off-the-shelf solutions and it will often cost a lot less in the long run. Prevention is always better than cure, so take the right advice from the right people now, rather than trying to fix the problems created by unqualified advisers at a later point.
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