This is why you need to avoid Asset Protection Trusts
As an Accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA), something that regularly irks me is the promotion of Asset Protection Trusts.
These trusts are usually promoted by unregulated will writers, who suggest they allow the buyer to ‘protect’ assets from local authority means testing when an individual needs residential care in the future.
Earlier this week, the investigative Channel 4 programme Dispatches highlighted the dangers associated with the sale of these so-called ‘Asset Protection Trusts’.
The programme, which was broadcast on Monday evening, warned consumers these Asset Protection Trusts might not offer the simple solution the sales people suggest they are to take an often emotive financial planning challenge.
Founder and Joint Chair of the Society of Later Life Advisers, Tish Hanifan, featured on the programme and commented on the statements made by the salesman exposed during Dispatches’ undercover filming.
Tish expressed concerns about some of the statements made in the filming and questioned the efficacy of these trusts.
Tish Hanifan commented:
I was delighted that Channel 4 Dispatches choose to warn viewers of the dangers of these ‘One Trust fits all‘ packaged solutions and happy to assist them in reminding viewers that this is not something to enter into lightly.
The advice given to this lady was not in my opinion advice at all but rather a sales pitch. Had this lady spoken to a qualified, regulated financial adviser such as one of our later life accredited SOLLA members they would have highlighted the drawbacks as well as any of the potential benefits of using a trust.
In particular they would have ensured that the client was in a position to make an informed choice and managed their expectations as to whether this solution would achieve their objective. That is the benchmark for good advice.
On addition to this a good financial adviser would ensure the client was made aware of the importance of independent legal advice from solicitors such as SFE members.
It is regrettable that the programme did not make clear that the sales person involved was not a regulated financial adviser but rather a representative of a will writing business.
Tish did however go on to congratulate Dispatches on raising awareness of the problems of these Trusts being sold, often to vulnerable consumers.
When considering care fees planning for an elderly relative or friend, it is essential to seek advice from a properly qualified and regulated individual.
Buying an Asset Protection Trust from an unregulated salesperson is likely to be an expensive folly; local authorities will rightly view the use of these trusts as deliberate deprivation, designed to avoid paying for the cost of care when eligible assets are available.
In any case, if a relative has the wealth to pay for a high standard of care in later life, why would you want to deprive them of this opportunity and force them into a local authority funded care home?
Proceed with caution if someone is trying to flog you an Asset Protection Trust and speak instead to an SOLLA member who can offer professional, expert advice.