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Taking a cautious approach to door to door sales persons for Wills, Trusts and LPAs – an estate planning checklist for everyone

Over the last year or so, a trend we have noticed is that increasingly people (often in vulnerable situations) were targeted by door to door sales

Over the last year or so, since lockdown began, a trend we have noticed developing is that increasingly people (often in vulnerable situations) have been targeted by door to door salespersons selling them Wills, Trusts and Lasting Powers of Attorney with little, poor or no advice at all. Although in some cases this may appear very convenient for people not able to leave their homes when isolating who require these documents, for others it is a potential trap for extortionate costs, poor advice and a potential negligence claim.

Real life example

Below is a real-life example we have dealt with: an elderly couple in a small village in the Midlands were approached by a salesperson at their door in the midst of the initial lockdown. They were told the following:

  • They could have new complex Wills with trusts drawn up which would avoid care fees;
  • They could put their property into a trust which would prevent it from being included for means-tested benefits, care fees and would remove it from their estate for inheritance tax purposes; and
  • They would not need to leave their house to have any of this work done.

As with all purchases - if it sounds too good to be true, it usually is. This ‘package’ came with a substantial cost of over £4,500 plus an annual storage fee for all resultant documents.

So why was this too good to be true?

One of the adults had been diagnosed with vascular dementia and therefore it was foreseeable that one day they would probably need additional support in the form of social care services. This immediately undermines the ability to avoid care fees and could also be seen as  an attempt by them to deprive themselves of assets.

Secondly, they were persuaded to place their home into a trust which meant they no longer owned the legal title yet retained a benefit of its use. From an inheritance tax perspective, this meant the value of the property still fell within their estate, they lost the residence nil rate band and they were also potentially exposed to another deprivation of assets claim.

The advice therefore achieved none of the ‘benefits’ they were sold and actually placed them in a worse position.

Steps to rectify the position

These clients had been taken advantage of and had been mis-sold products by someone who was not familiar with the law, the tax implications of their ‘advice’ and did not properly take into consideration the personal circumstances of the clients.

Fortunately, we were able to cancel their contract with the rogue salesperson and claim back the deposit of £1,250 they had paid before any further damage was caused.

Checklist

Unfortunately, we expect to see other examples of situations such as this.

With this mind we have produced a checklist for people to use when considering whether to instruct a solicitor or will-writer to prepare a Will, trust or other estate planning document. All of the matters in the checklist should be discussed in a meeting before any documents are drafted or executed:

Your mental capacity 

The law requires you to have ‘testamentary capacity’ in order to create a valid Will or trust. This means you must understand a number of things including:

  1. What you are hoping to prepare (a Will or trust), and the effects it is to have;
  2. What your estate consists of and how this will be disposed of;
  3. Understanding that if someone is excluded as a beneficiary they may be able to bring a claim against your estate and the likely consequences of such a claim; and
  4. Not have a disorder of the mind which could undermine the fact you have testamentary capacity.

If all of the above cannot be answered with a resounding ‘yes’ then there is an issue, an issue which needs to be discussed with a qualified person such as a solicitor, medical professional or qualified estate planning advisor.  A STEP qualified adviser is recommended – they will have the designation TEP after their name.  The Society of Trust and Estate Practitioners governs their members by way of a Will Writing Code which is available on their website which requires a ‘gold standard’ of advice and client care.

Your family structure 

Full and proper advice in relation to potential claims against an estate cannot be given without the full disclosure of the family structure. For example, it would be inappropriate to gift a property on your death where there is a dependent living in it. Other common examples include where there is an estranged child in the family; excluding them from a Will can lead to a claim unless this is fully discussed when the Will is prepared. Correct advice can help minimise the chance of a successful claim against the estate.

Your health

When looking at whether someone has deliberately deprived themselves of assets the test applied by the state is ‘was it reasonably foreseeable at the time of the transaction that this person would have needed social care or support from the state’. Taking the example of our clients above, one of the clients had vascular dementia, a condition which is likely to have an impact on the client’s abilities in the future and as a result may be foreseeable that they may need some additional support from their local social care team in the future.

Your aims and wishes

Not everyone wants the same thing to happen on their death or with a trust during the course of their lifetime. Every individual case is different. When instructing someone to prepare such important documents, you should ensure that the person fully understands your aims, the reasons for those aims and how you have come to your decision. If an advisor does not discuss these matters with you there is no way they can provide you with the proper advice you need, which could lead to a claim under the Inheritance Tax (Provision for Family and Dependents) Act 1975 on your death or numerous other unintended consequences.

The options available to you

Normally, a range of options will be available to you when drafting a Will or Trust; not just to give effect to your aims and wishes but also to add other levels of protection. Of course, the more complex an estate and the level of planning required is, the more expensive the services may be. Therefore, always ask an advisor what your options are, what they recommend for you and why they are recommending those options for you (over other available options). This is the advice you should pay for.  

Summary

Whenever taking advice from someone who is recommending a Will, trust or lasting power of attorney, ask yourself - have they addressed all of the above 5 points and, if they have not, why not?

Many people think, when paying for estate planning advice, they are paying most money for the document they receive after the meeting, whether that be a Will, trust deed or LPA. However, it is the advice that is the most valuable part of the process; the advice is the crux of the documents ultimately prepared for you.

If you have any questions or queries about advice you have already taken or are looking to take please feel free to make an enquiry with any of our Wills, Trusts and Estates advisors.

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