You can challenge a Wealth Preservation Trust

Nov 13, 2018

Ipswich based company, Universal Wealth Preservation (UWP), has for a number of years claimed to be able to protect homes and savings from care fees, the taxman and other threats, by setting up Wealth Preservation Trusts. Sadly for the many clients involved, UWP is now facing an investigation, and there are reports of several people trying to exploit the situation. Now more than ever, it is important to obtain legal advice or advice from a trusted and experienced source.

What is a Wealth Preservation Trust?
The name Wealth Preservation Trust is frequently seen in connection with Inheritance tax planning and several insurance company products with this or similar names. In this context however, we are not talking about insurance products, rather about the creation of a Trust which takes over ownership of your property while permitting you to remain in the house.  The reasoning behind these trusts is that the property no longer belongs to you, instead it belongs to the trust and for that reason it is not part of your wealth for the purposes of paying for such things as nursing homes or care fees. In crude terms the idea is to put your property out of reach of your creditors.

For a long time, Herrington Carmichael and many other respected advisers have counselled against this sort of trust arrangement on the grounds that they can easily be challenged by local authorities and also that they include some dangerous and often undisclosed inheritance tax pitfalls.

A slightly unusual aspect of the way that UWP worked was that frequently an associated company, Universal Trustees Ltd was appointed as a trustee and people entering into the Wealth Preservation Trust would transfer their property into the joint names of themselves and Universal Trustees Ltd.

Universal Asset Protection Limited, the underlying company that operated UWP and Universal Trustees Ltd, was put into compulsory liquidation in May 2018. Since then, a number of people have been involved in attempts to unscramble the situation.

Herrington Carmichael has been involved in at least one such case and would be happy to advise further. There are two principal issues involved here, firstly is to remove Universal Trustees Ltd as a Trustee of your home. This is not quite as easy as one might expect, and may require a court order; although as a firm we have been exploring other avenues which if successful would be quicker and cheaper than a court application. The second issue is to see if there is anyway or unscrambling the Trust itself, which will depend on the facts and the values involved. With lower value properties, it may be possible to simply terminate the trust and revert to the original situation in which you own the property involved.  Where higher values are concerned, there is again the risk of having to go to court to get the trust declared null and void. This latter course of action may be required if there is a danger of having to pay inheritance tax as a result of the creation of the trust.

What should I look for when choosing a company to advise on wills / trusts /estate planning?
We often have clients who have been previously ill advised or who have used an inexperienced or even DIY service. Many of these services are not regulated or are subject to a limited amount of self-regulation. Some do not even hold full professional indemnity insurance, meaning that if anything goes wrong, you or your family’s redress may be limited.  Similarly, many of the people who claim to have wide experience of will and trust preparation have very limited training and rely heavily upon using computerised drafting software. When looking for someone to assist with advice and preparation of wills or tax planning, it is essential to look for a person with professional qualification. As a general rule, the cheaper the advice the less likely it is to come from someone who is adequately qualified, similarly any one who advises you that his or her advice is “guaranteed to” protect your property, save you tax or whatever is almost certainly inadequately qualified. None of us can guarantee that our ideas will work, all we can do is tell you what does or does not work at the present moment and to try and advise on what we think will work in the future, and to promise more than that is a sure sign of someone who is a better salesman that practitioner.  We would always suggest seeking advice from a Solicitor and preferably someone who is a member of Society of Trust and Estate Practitioners (STEP), Solicitors for the Elderly and or the Law Society’s Private clients section. Other professionals who may be able to offer advice are Chartered Accountants and Chartered Financial Planners but it is always essential to ensure that these are fully qualified. Many Accounts and Financial Planners are members of STEP.

In the meantime STEP one of the country’s leading associations of specialist Trust and Tax practitioners and of whom most of our Private Client’s team are members, has produced a question and answer paper which may be of use to anyone who has become involved in a Universal Wealth Protection Trust:

https://www.step.org/policies/universal-wealth-preservation

For further information please contact Anthony Tahourdin or Alex Mulroe in our Private Client’s team.