The fear of paying hefty inheritance tax and future care home fees led to thousands of people putting blind trust in an unregulated company, which may now cost them dearly as the company shut down and the owner was investigated for fraud.
Thousands of people in the UK are at risk of facing a massive ten-year tax charge after they put their property in trusts.
At a certain point in life, many people start looking at their legacy, as they take steps to prepare for future care home fees and inheritance tax.
For this reason, about 8000 people turned to Universal Wealth, which was an unregulated company owned and run by Steven Long and his wife Melanie Long, reports The Express.
The company ran a series of seminars across Britain, advertising will writing, and LPAs with their most profitable service being their wealth preservation and family trusts.
They then encouraged individuals to transfer ownership of assets including their homes and savings into trusts set up by themselves, claiming the main purpose was to "protect clients".
If the trust option was taken, they recommended that they be appointed as trustees of the assets placed into a trust together with the clients.
This meant that these assets were transferred into the control of the Longs, as well as the registration of an equivalent charge at the Land Registry.
The trusts are basically lifetime settlements that transfer the ownership of properties into the name of trustees, granting the owner the right and use of the house for life.
On the death of the first joint owner, their half share of the property is "ringfenced" into a trust to avoid the sale of the house in the future. They can choose to sell their home, but trustee approval was required – and that was the problem.
The company ceased operations in 2018, leaving many pensioners who thought they were taking steps to protect themselves unable to access their money and facing difficulties in selling their homes – as permission of the trustees was needed.
All files of Universal Wealth have now been seized by the CPS to be investigated and Steven Long has been jailed by Mrs Justice Rose for contempt of court.
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Express.co.uk spoke to two of the couples who had put their money into these trusts.
One couple said: “If you are considering doing this to prevent your house from being used to pay for nursing home care in your later years be very careful. Don’t be fooled as I was by, on the face of it, a very professional outfit who turned out to be scammers and are now in prison.
"They gave us all of the advantages and none of the downsides. We have been very lucky but at a cost to me and my wife. We took professional advice from a good solicitor and were able to reverse the situation on our property.
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"It was expensive but when one considers we would have had to pay capital gains tax were we to sell the property, we were both glad that we did what we did and took the advice. Finally, think carefully before you do the former and you will save yourself having to do the latter.”
“We suspect that this is the tip of the iceberg and that there could well be hundreds if not thousands of families with their properties sat in these Universal Wealth Trust," said Martin Holdsworth, founder, and director of IDR Law.
The second couple, who had attended a seminar by Universal Wealth, said: "In 2012 my wife and I attended a seminar which suggested we could set up an asset protection trust. This would involve putting our house into a trust which would prevent us from being forced to sell the property to pay care home fees if either of us had to go into care.
"We were at a vulnerable point in our lives when my mother, who was in the advanced stages of dementia, had just entered a care home and the large costs were foremost in our minds. The trusts were duly set up by putting a charge against the property and we thought the matter was settled.
"We even paid for another branch of Universal to act as professional trustees. It was with a sense of gut-wrenching horror that we found out in late 2018 that the company had been forced to close down and the owner was being investigated for fraud."
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This is just two out of potentially thousands of couples that face massive tax charges
After seeking the advice of a solicitor, they found that the wording of the trust left them liable for capital gains tax on the whole value of the property.
They added: "If we chose to move house we would, at that point in time, be liable for some £125,000.
Yet it was explicitly stated in the documents from Universal that because it was our primary residence that had been put in trust there would be no CGT.
"Unfortunately, the inept wording of the trusts had created this tax liability. What was also not clear was that every 10 years we would have been liable to pay an annual tax bill on the value of the property – this was expressed as a nominal fee every 10 years. You would have to be very rich indeed to regard somewhere in the region of £30,000 pounds as nominal!
"The impact on us was devastating, such charges would rapidly eat into our life savings and leave us nothing to pass on to our son who would be forced to sell the family home to cover these debts."
Their solicitor, an experienced trust practitioner, said she had "never seen a charge against a property used in this way before", so the couple sought a barrister’s advice to see if it was even legal and to their surprise, it was.
IDR Law has been contacted by a number of families and helped both of the couples who spoke to us.
Martin Holdsworth, founder, and director of IDR Law, said: “We suspect that this is the tip of the iceberg and that there could well be hundreds if not thousands of families with their properties sat in these Universal Wealth Trust and Legal Charge schemes and completely oblivious to the 10-year tax charge they are liable for on those trusts.
"To ensure we can assist as many families as possible, we have set up a triage system here at IDR Law that has been designed to provide free initial advice to any of the estimated 8,000 families affected by the Universal Wealth.
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