Trust Issues
Busting the Myths Around Asset Protection Trusts
A Growing Problem
In recent years, Asset Protection Trusts (APTs) have been marketed as the silver bullet for everything from avoiding care fees to skipping probate and slashing inheritance tax. Promoted under names like "Home Protection Trusts," "Family Trusts," or simply wrapped into "free will" schemes, these products promise peace of mind - but too often deliver something else entirely.
In a series of recent articles in The Telegraph, troubling practices around these "free" schemes have come to light. The investigation revealed that what looks like a solution can often be a gateway to a complex legal product, sometimes sold without proper advice or suitability checks. The cost of unpicking such arrangements? Thousands.
"The rise of Asset Protection Trusts being marketed as universal solutions is deeply concerning," notes Nellie McQuinn, CEO of AWAY Wills. "What we're seeing is a fundamental misalignment between client needs and the solutions being pushed."
Below, we separate fact from fiction, and explain when trusts can help—and when they can hurt.
Myth 1: "A trust will protect my home from care fees."
Reality: It might not. This is perhaps the most common reason people are sold an APT, and also the most misunderstood.
In theory, if your home is no longer in your name but instead held in a trust, it won’t be counted in a financial assessment for care home fees. But in practice, local authorities have the power to look beyond the paperwork.
If you move assets into a trust and you knew you might need care in the future, that transfer can be classed as deliberate deprivation of assets. That means the council can act as though the asset is still yours when working out how much you need to contribute to your care.
Even if the transfer happened years ago, the local authority can investigate and reverse the effect of the gift. There is no time limit - what matters is your intention at the time of the transfer. If they believe you were trying to avoid care costs, they can still include the home in your assessment.
It’s not just about what you say; it’s about what a reasonable person might expect. If you’re over 60 and healthy, you might think a trust is “future-proofing” your estate. But if you're already in poor health or have a diagnosed condition like dementia or Parkinson’s, it becomes very difficult to argue that care wasn’t foreseeable.
Even more critically, many APTs are structured so that you retain a benefit - for example, the right to live in the property rent-free. This raises another red flag, as HMRC and local authorities may argue that the transfer wasn't genuine because you’ve not really given up control. In legal terms, this falls under the “gift with reservation of benefit” rules, and again, it means the value of the home may still be assessed as yours.
There are also practical complications:
Some local authorities have entire teams dedicated to identifying and challenging deliberate deprivation.
Being caught out may not only mean paying full care fees but also legal fees to defend the trust’s validity.
If you do succeed in removing your home from your estate, you could find yourself unable to downsize or release equity if your financial situation changes.
In short: trusts are not a guaranteed shield from care costs. The only foolproof way to avoid paying for care is to not need it.
Myth 2: "Trusts are faster and cheaper than probate."
Reality: Not necessarily. While trusts can help avoid probate in some cases, they can also introduce more complexity. If the trust contains over £250,000 in value and you’ve retained a benefit, HMRC will require a full inheritance tax return (the dreaded IHT400) when you die. That process is neither fast nor cheap.
Some clients spend more unravelling a poorly set-up trust than they ever would have on probate.
Myth 3: "If my home is in a trust, I won’t pay Inheritance Tax."
Reality: Not automatically. Just putting your home into a trust doesn’t remove it from your estate for Inheritance Tax (IHT) purposes.
This is particularly true if you continue to benefit from the property—for example, by living there rent-free. In that case, HMRC is likely to view the arrangement as a “gift with reservation of benefit,” and include the property’s value in your estate.
What’s more, many APTs are not structured as lifetime gifts for IHT purposes at all. In some cases, they’re considered “relevant property trusts,” which attract their own tax charges every ten years and when capital is distributed.
You may also lose access to valuable tax reliefs - such as the Residence Nil Rate Band - if your home is no longer considered part of your estate in the right way. The rules here are nuanced, and the wrong structure can lead to an unexpected tax bill that is much larger than the original one you were trying to mitigate.
Get in touch if you are considering setting up a trust. What looks like a clever loophole might just be a costly misstep.
Myth 4: "If a firm is regulated, I can trust their advice."
Reality: Regulation is important, but it’s not the whole story. As Anthony Belcher, Managing Director of the Society of Will Writers, points out, “Regulatory status alone cannot guarantee quality service.” Some regulated firms operate on commission-based models, pushing APTs on clients over 60 with little to no consideration of suitability.
The danger here isn’t just financial. Vulnerable individuals are being targeted with solutions they neither need nor benefit from.
The Hidden Cost of "Free"
This situation becomes particularly troubling in the context of so-called “free will” offers. The Telegraph investigation found that many of these schemes were simply lead magnets for high-cost trust upsells. The initial product might cost nothing, but the hidden fees (financial and emotional) can mount quickly.
Nellie McQuinn explains, “Estate planning should never begin with a predetermined solution. Each client's situation is unique and deserves careful consideration before any recommendations are made.”
Too many clients come to AWAY Wills looking to unpick the promises made by fast-talking sales reps. What they often find is that the trust doesn’t do what they thought it would and that getting out of it is harder than getting in.
So, When Is an APT …. apt?
Used properly, APTs can be incredibly useful. For example, they may help:
Protect assets from sideway disinheritance in blended families
Ringfence assets for children in unstable relationships
Maintain control over complex family situations
Support people with disabilities without impacting benefits
But those are very specific use-cases. Trusts should be recommended because of your needs, not despite them.
Key Takeaways
Be sceptical of sales tactics. If a will is free but the trust is £2,000+, interrogate if it’s actually necessary or an upsell.
Understand deprivation of assets. Transferring property into trust isn’t always a free pass.
Check for ongoing obligations. Trustees need to file accounts, manage taxes, and maintain records.
Ask if the solution fits your specific goals. No two families are the same. Your estate plan shouldn’t be, either.
Final Word
Estate planning is about people - not products. A good plan reflects your relationships, your risks, and your values. That takes time, care, and expertise.
In the complex world of legacy planning, shortcuts often come at a cost. If you’re considering a trust, make sure the advice you’re getting is truly in your best interest. Because when it comes to your legacy, the last thing you want is a plan that works perfectly… for someone else.
