Family Protection Trusts - why not?

poseidon1

These dangerous structures largely  sold by unscrupulous FAs , frequently come up for discussion in this forum.

Below is reporting on misselling of such 'trusts' but this time on a truly  industrial scale by a Scottish firm of Solicitors -

https://news.stv.tv/scotland/thousands-stuck-in-legal-turmoil-after-collapse-of-mcclure-solicitors?utm_source=newsshowcase&utm_medium=discover&utm_campaign=CCwqGQgwKhAIACoHCAowk-f5CjCN3OYCMNyD9gMw0r-fBA&utm_content=bullets

In my view, that a firm of solicitors was directly involved in 'conning' so many unfortunate families is truly unconscionable. I suppose those of us on this forum who regularly denounce these arrangements should be aware that it is not only dishonest FAs one should look out for as purveyors of such schemes.

Mands

poseidon1 said:

on a truly  industrial scale by a Scottish firm of Solicitors -

One firm with 400 new clients a month. This is an enormous mess that we are not yet seeing the true impact of. 

Yorkie1

It's cost a fortune to review and decide what to do with my parents' FPTs - with a separate firm who took over the business after McC's stopped doing this business - and to remove the individual McC's trustees (one of whom is no longer practising). Mum is still getting some asset statements in the names of those people, some years on. Tax hadn't been dealt with by them. Flippin' nightmare.

Pollycat

From the linked article:

With a Trust, you have a greater say over who gets what, and a key selling point for McClure was that you could theoretically protect your house from being sold to pay for care home fees. 

Is this why all those people set up trusts?

boingy

Pollycat said:

From the linked article:

With a Trust, you have a greater say over who gets what, and a key selling point for McClure was that you could theoretically protect your house from being sold to pay for care home fees. 

Is this why all those people set up trusts?

It's one reason, although it seems it is not as effective as it used to be. Decades ago my parents set up trust(s) for inheritance tax reasons. The problem with such long term planning is that the rules tend to change over that time so those trusts are no longer required and are difficult and expensive to wind up. Oh for a time machine... 

Pollycat

boingy said:

Pollycat said:

From the linked article:

With a Trust, you have a greater say over who gets what, and a key selling point for McClure was that you could theoretically protect your house from being sold to pay for care home fees. 

Is this why all those people set up trusts?

It's one reason, although it seems it is not as effective as it used to be. Decades ago my parents set up trust(s) for inheritance tax reasons. The problem with such long term planning is that the rules tend to change over that time so those trusts are no longer required and are difficult and expensive to wind up. Oh for a time machine... 

So people want to protect their assets from care home fees and other people end up picking up the bill for their care...

Doesn't sound very fair to me.

boingy

Pollycat said:

boingy said:

Pollycat said:

From the linked article:

With a Trust, you have a greater say over who gets what, and a key selling point for McClure was that you could theoretically protect your house from being sold to pay for care home fees. 

Is this why all those people set up trusts?

It's one reason, although it seems it is not as effective as it used to be. Decades ago my parents set up trust(s) for inheritance tax reasons. The problem with such long term planning is that the rules tend to change over that time so those trusts are no longer required and are difficult and expensive to wind up. Oh for a time machine... 

So people want to protect their assets from care home fees and other people end up picking up the bill for their care...

Doesn't sound very fair to me.

The world's not fair, and it's not really for you or me to judge. Back when my parents made the trusts care home fees were not really a concern. It was all about managing IHT. Fast forward to today and I'm a reluctant trustee of a trust I wish didn't exist. It won't protect against care fees and IHT rules have changed so that trust is pointless. However, there are loads of "professionals" who continue to prey on folks by recommending expensive and unnecessary trusts to them. Everyone wants to give their kids the best inheritance so they are an easy target. Personally, I wish I had refused to get involved all those years ago, even though that would have seriously upset my parents and probably the wider family. 

Keep_pedalling

Pollycat said:

boingy said:

Pollycat said:

From the linked article:

With a Trust, you have a greater say over who gets what, and a key selling point for McClure was that you could theoretically protect your house from being sold to pay for care home fees. 

Is this why all those people set up trusts?

It's one reason, although it seems it is not as effective as it used to be. Decades ago my parents set up trust(s) for inheritance tax reasons. The problem with such long term planning is that the rules tend to change over that time so those trusts are no longer required and are difficult and expensive to wind up. Oh for a time machine... 

So people want to protect their assets from care home fees and other people end up picking up the bill for their care...

Doesn't sound very fair to me.

Local authorities have the power to consider such schemes as deliberate deprivation of assets and refuse to fund residential care.