Posted: Friday, 4 January 2019 @ 13:43
The recent instance of a retired solicitor struck off after allegations of overcharging and taking advantage of a client actually shows why trusts are more often than not a bad idea.
In this case it is the solicitor's conduct which has been criticised but trusts are subject to potential financial abuse and/or incompetence by any Trustee. Indeed, generally I would prefer to have a solicitor as trustee despite the cost.
However, my experience is that unless there are compelling reasons trusts create administration problems, financial obligations and can exacerbate family tensions.
Leaving aside the tax benefits of using a trust, the main scenario in which I recommend people use trusts is typically if you have concern about the beneficiary receiving the lump sum in one go. In that instance, you head towards a discretionary trust.
Or you can use it to act as some kind of mitigation of care home fees.
The problems start when people start getting greedy and getting led on by companies suggesting for some ridiculous fees that they should wrap the whole property in a trust to avoid care home fees. No guarantee and not necessarily in one's interests.