What happened for previous clients of McClure Solicitors and their Family Protection Trusts?
Written by Amy Douch | Wills, Trusts, Tax and Probate Team | 10 July 2024
The collapse of McClure Solicitors has left many clients in a state of uncertainty and concern, particularly for those who had set up Family Protection Trusts. Former clients have found themselves left in the dark regarding their trusts and are now seeking advice about the best options available to them.
What happened to McClure Solicitors?
McClure Solicitors was a law firm in the UK that specialised in estate planning, including Wills and trusts. In 2021, McClure Solicitors went into administration, leaving thousands of clients with significant concerns and difficulties with their estate planning measures. Since their administration, clients’ cases have been transferred to another law firm, Jones Whyte.
Whilst some of the Trusts the clients set up were appropriate for their specific circumstances, many clients believe that they were mis-sold trusts and are now taking legal advice to decide whether the trusts are appropriate for them or not. Many trusts which were advertised as being able to avoid care fees, remove the need for probate fees or reduce inheritance tax have actually had the opposite effect. This means many clients which set up trusts are now in the process of ending these.
It can be a distressing time for clients who have now found they are having to spend additional money on legal fees and unexpected tax liabilities and reporting requirements to rectify this, and we have set out below some information to help clients and their loved ones understand more about the situation they find themselves in.
What are the common issues faced by clients?
As a result of their administration and the claims made against McClure’s, issues that clients have encountered include:
Concerns Over Care Fees: many clients believed on entering these trusts, that they would not need to pay any care fees. Unfortunately this is incorrect as all local authorities have far-reaching powers, which mean that assets transferred to trusts (or any other party) with the intention of avoiding care fees, can still be taken into account and used towards payment of care fees. This is called the ‘deliberate deprivation of assets’ rules
There is no time limit for how far back the local authority can go when making decisions on whether there has been deliberate deprivation. Transferring assets into a Family Protection Trust with the intention of avoiding care home fees can be scrutinised by authorities
Unintended Tax Liabilities: some former clients have since faced unexpected tax liabilities due to poor advice and improper trust setup. These have included Capital Gains Tax, Inheritance Tax, and other charges that were not explained or accounted for during the trust’s creation
Reporting obligations: as well as tax liabilities, these trusts do also have ongoing reporting obligations, including 10 yearly inheritance tax returns, annual income tax returns where appropriate, and registration with HMRC’s Trust Registration Service. Failure to submit returns within relevant deadlines mean that some trusts will incur late filing penalties and/or interest as well as potential significant inheritance tax liabilities every 10 years which clients were not previously aware of
Loss of Control Over Assets: some clients experienced a loss of control over their assets as McClure’s lawyers appointed themselves as trustees. This has caused significant stress, as individuals have since struggled to locate these trustees in order to make changes to their own assets and trust
What should I do if I am a former client of McClure’s?
We’ve written an article that provides advice for former clients regarding how to proceed following McClure’s administration. Whether you need advice about where to start, or you feel you’re unsure how to proceed any further, we recommend reading our blog.
The administration of McClure Solicitors has had a huge impact on their former clients, which has resulted in stress and worry. It’s important that you seek professional advice as soon as possible to ensure your trust is working for you. Our team has worked with many former clients of McClure to help them put things right for themselves and their loved ones. If you’d like to discuss your circumstances with them, you can get in touch with them directly by calling 01752 827067 or emailing wills@nash.co.uk.
