Asset protection trusts (also known as 'asset protection trusts' 'family protection trusts' or 'flexible trusts') are often sold as a way to protect your home, property, or savings from future costs such as care home fees or inheritance tax. In reality, many asset protection trusts are set up using standard templates rather than tailored legal advice. This means they often do not achieve what they promise and can even leave families facing unexpected tax bills, care fee disputes, or legal challenges.

Yes - trusts are a legitimate legal tool when they are drafted correctly by a qualified and regulated lawyer. However, many asset protection trust schemes are sold by unregulated companies. These firms often claim the trust will definitely protect your home from care fees or inheritance tax, but this is misleading. Local authorities can view these arrangements as “deliberate deprivation of assets” and treat you as still owning the assets in the trust when assessing how much you need to pay for your care. They may also be ineffective for inheritance tax planning, sometimes resulting in a loss of exemptions, reliefs, and allowances.

Asset protection trusts are often sold by advisers who are not regulated. They may describe themselves as “estate planners” or “trust experts” but they are not regulated lawyers (unlike solicitors, chartered legal executives, and CILEX lawyers, who are). Without regulation, they don’t have to meet professional standards - and if the trust fails, you may have no route to complain or claim compensation.

Warning signs that you or a loved one may have been mis-sold a trust include:

• Pressurised sales techniques
  
• Paying thousands of pounds for a generic trust document
  
• No detailed assessment of your family, finances, or tax position
  
• Promises that your home will definitely be protected from care fees and/or inheritance tax
  
• A lack of clear written advice about risks
  

If any of these apply, it’s worth getting a review from a qualified lawyer.

The risks of an asset protection trust can include:

• Losing control of your home or savings once they are placed in the trust
• Unexpected inheritance tax or capital gains tax charges
• The trust being disregarded by local authorities when assessing care fees
• Expensive family disputes if the trust is challenged after death
• Spending thousands of pounds on something that does not work as intended

These risks are especially high when the trust is sold by unregulated advisers rather than a regulated lawyer.

If you or someone you know is concerned about having set up an asset protection trust, you should:

• Gather all documents relating to the trust
• Avoid signing or paying any further fees without independent legal advice
• Contact a regulated lawyer ideally one of our Accredited Lifetime Lawyers, for a review and guidance on next steps