Tens of thousands of pensioners and people approaching retirement have been sold worthless ‘trust' schemes that promised to protect their home if they went into care.
Regulators are to take action against rogue advisers thought to have made millions of pounds by preying on the fears of the retired.
Whitehall guidelines and a tough new approach by local authorities mean that any ‘asset-protection trust' that has been obviously established to spare people having to sell their home should they need long-term care will be disregarded.
Tens of thousands of older people have paid up to £10,000 to unscrupulous advisers, including lawyers and financial consultants, for a worthless piece of paper, according to the Daily Mail.
"We are aware of the issue of mis-selling of asset protection trusts,' said the Solicitors Regulation Authority. ‘If necessary, we will work with other regulators."
Asset-protection trusts have been around for many years and have a legitimate role, in tandem with a will, in ensuring a person's property is managed and disposed of in line with their wishes.
But with rising anxiety over the cost of care in old age, and the requirement that some people sell their homes to help pay for it, the trusts are being marketed as a way of shielding assets from local authority assessment officers.
"Trusts have been mis-sold by many so-called providers by claiming it can save healthcare costs in old age," said Aris Nicolson, barrister with law firm Denning Legal, a reputable trust provider.
"Sold as such, this is simply not true, as this would constitute a "deliberate deprivation of assets"."
Nicolson added that a trust set up when the client is ‘fit and healthy' and as part of lifetime planning could properly protect their property from being sold to meet care costs.
Janet Davies, joint managing director of care-fees planning company Symponia, said: "Trusts may be appropriate in some circumstances but these "asset-protection farms" are absolutely terrible. Local authorities are looking at trusts very closely."
