Universal Wealth Preservation (“UWP”) was a commercial organisation whose business model was charging people to set up trusts of which UWP were trustees. The clients then transferred their homes into those trusts, with the aim of protecting them from care fees. This meant transferring the properties into the name of UWP whose authority was therefore required before the relevant property could be sold or mortgaged. Ultimately UWP would be able to charge further fees when the clients died and their properties were sold.
UWP have since gone into liquidation, but there are still companies offering the same service. Whilst there is no suggestion that these companies have misused any of the properties, the fact is that many people are left unable to deal with their own houses and have unnecessarily complicated Estates to deal with in the event of death. Furthermore, the Trusts are unlikely to offer the “protection” that was assured when they paid several thousand pounds to create the Trust because the local authority have the power to set aside any Trusts that were created purely to avoid paying care home fees.
We are now seeing more probate cases that involve one of the Trusts and it is resulting in a more complicated, and sometimes more expensive, process to deal with the Estate. UWP and other similar companies often suggest that setting up the Trusts will help to simplify the probate process in the event of death because the property will no longer be part of the Estate so a Grant of Probate will not be required, but there are often other assets in the Estate that still require a Grant of Probate and the existence of the Trust then makes the probate process more complicated because it has to be treated as a “gift with reservation of benefit” for inheritance tax purposes.
We have now assisted many Executors dealing with an Estates that involves one of these Trusts. Some of these Estates would otherwise be fairly straightforward, and well within the available nil rate bans, but the existence of the Trust means that the more complicated tax forms are required, and the residential nil rate band may not be available because the Trust owns the property. This could result in there being an Inheritance Tax liability that would otherwise not have existed if the property had not been transferred into the Trust.
A further issue is that UWP, and other similar companies, are completely unregulated so that there is no safety net or it may be difficult to recover compensation for any loss caused. By contrast, Solicitors are legally and financially, and the Law Society has a compensation fund to reimburse clients who suffer loss, so it also must better to use a Solicitor to help create and deal with any aspect relating to the Trust and/or Probate.
If you have any further questions regarding Universal Wealth Preservation or if you would like further information on how we can help, please contact a member of our Wills, Trusts & Probate team by email or by calling our team on 0161 941 4000.