Written by Rafael Singer (Solicitor)
Late last year I took instructions from a couple (who I will refer to as Elizabeth and Eric) regarding wills and trusts. They had already instructed a will writer firm but were confused as to what they were purchasing. They were told that alongside their wills they should also make an “asset protection trust”. I asked them for what purpose – they weren’t really sure. They thought it would help reduce their inheritance tax liability as they were not currently married. This sounded a bit odd to me and they had not received written advice to confirm this. Elizabeth however took notes in the meeting with the will writers and it transpired that the trust would be in place to mitigate against care home fees. The couple however were only in their mid-40s! The will writer had said that the trust would cost several thousand pounds to set up, and in doing so they were happy to waive the charge of the wills.
It was clear to me that this was a case of clients suiting the product rather than the other way round. The company were trying to push trusts onto people who did not necessarily need them, and then making it seem like they were getting a good deal because the wills were thrown in at no extra cost. This is certainly not the only firm that we have encountered that have been doing this, and one in particular has made the national press. This is not only a waste of money for the clients, but also dangerous if it did not meet the clients’ other needs, for instance providing the other partner with the certainty of inheriting the other’s estate on the first death, rather than leaving it on discretionary trust with a multitude of potential beneficiaries.
I was able to draft them wills which suited their needs as well as provide them with advice in relation to trusts set up to mitigate against care home fees (the advice being that they did not need to worry about that at such a young age!). As Eric had dual citizenship, I was also able to refer them to a tax specialist to help them with cross jurisdiction issues that the will writers were either not interested in helping with, or not experienced to spot potential problems in the first place. We do not take referral fees – this was just an informal passing on of contact details with an expert who we know can do a good job.
This is a lesson in making sure the product suits the client and not vice versa.
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