Trust scandal leaves heirs with huge death taxes

‘Sham’ schemes sold to vulnerable pensioners affect thousands, reports Charlotte Gifford

The Costly Pitfalls of Family Protection Trusts

Many families have fallen into financial and legal trouble after being sold misleading estate planning products, believing they were protecting their assets. Instead, these so-called “family protection trusts” have left them unable to sell their properties, burdened with unexpected inheritance tax bills, and forced to pay thousands in legal fees to correct costly mistakes.

A Trust That Backfired

Annette Riding’s parents were not wealthy. Her father, Michael Nixon, was a retired builder, and her mother, Carole, had worked at John Lewis. They owned a modest home in Newcastle worth around £150,000. Like thousands of others, they were convinced by estate planners that placing their home in a trust would protect their estate and ease inheritance matters. In 2011, after a routine visit to the Newcastle Building Society, Carole was introduced to the Will Writing Company, which later persuaded the couple to put their home into a trust managed by McClure Solicitors. They believed this would safeguard their home, but in reality, it became an expensive burden.

When Michael passed away and Carole moved into a nursing home in 2021, the trust prevented their daughter from selling or renting out the property. Over the next two years, Ms. Riding incurred £10,000 in maintenance costs for the empty home and had to spend an additional £3,700 on legal fees to unwind the trust.

“From my perspective, the past few years have been an absolute nightmare,” she said. “All because my mum and dad put their faith in their building societies and solicitors – those they had been taught to respect and believe in.”

She is far from alone. Thousands of families who set up similar trusts with McClure have found themselves in difficult financial situations, facing legal roadblocks and unexpected tax bills.

The Inheritance Tax Trap

John Hopkins’s family experienced a significant financial blow after his passing in 2023. His estate, valued at £420,000, should not have been subject to inheritance tax. Normally, estates worth under £500,000—including the £175,000 residence nil-rate band—are tax-free when passed to children. However, because his property was held in a McClure trust, his family lost the £175,000 exemption, leaving only £325,000 protected from inheritance tax. As a result, they were hit with a £35,000 tax bill that could have been entirely avoided had the property remained in his name.

Beyond the tax bill, the family had to spend thousands in legal fees just to remove McClure’s solicitors from the property title deeds. Mr. Hopkins had set up the trust thinking it would simplify things for his family and ensure tax efficiency. Instead, it caused unnecessary financial strain.

To make matters worse, Mr. Hopkins was not introduced to McClure through an estate planner or building society but via a local charity—Age Concern in Exmouth. Documents later revealed that McClure marketed its services to charities, promising they could "boost" their fundraising efforts by partnering with the firm’s will-writing services.

Misleading Sales Tactics

One of the biggest concerns surrounding McClure was the way these trusts were sold. Many clients were introduced through building societies and charities, unaware that sales staff were financially incentivized to push these products.

A former Dunfermline Building Society employee revealed that between 2008 and 2012, branch staff received commissions for every trust sold. “We were told to target people from the age of 60 and up, reaching out through client lists and encouraging them to come in for a chat,” the employee said. “If I knew then what I know now, I’d have never sold it to any of my customers. Absolutely none of them.” McClure marketed the trusts as a way to shield assets from care home fees. However, many local councils refused to recognize them as legitimate, meaning families who thought they were protecting their homes ended up spending thousands on legal fees to challenge council decisions.

For instance, Paul Pygott’s parents were persuaded by the Will Writing Company to place their home and savings into two separate trusts. Years later, Leeds City Council refused to cover his mother’s nursing home fees, claiming the trust was a deliberate attempt to avoid paying for care. Paul was left with a £26,000 bill from the care home and had to spend an additional £6,000 in legal fees to resolve the matter.

Similarly, Brett Porter’s 96-year-old grandmother placed her home in a trust with McClure when she was 84, under the promise that it would protect her property. Now that she is in a nursing home, Oxford County Council has refused to recognize the trust, meaning the home must be sold to cover her care fees. “They promised there wouldn’t be any future charges – that’s not true,” Mr. Porter said.

McClure’s Collapse and the Aftermath

McClure, which set up over 18,000 trusts, went into administration in 2021. Philips Trust Corporation, another firm that specialized in wills and trusts, followed suit in 2022. After McClure collapsed, its client files were transferred to Jones Whyte Solicitors. However, the transition has been plagued with delays.

The Solicitors Regulation Authority (SRA) stated that the process had “not been carried out to the standards we and clients would normally expect.” Many families are frustrated by slow responses and additional fees. Jones Whyte has been charging £400 just to review cases before offering any advice. The SRA is investigating potential mis-selling and the quality of advice given to clients but cannot take enforcement action against former McClure partners who are no longer registered solicitors. Meanwhile, banks and building societies have directed affected customers to the Legal Ombudsman or the Scottish Legal Complaints Commission.

Police Scotland recently dropped a four-year investigation into McClure, stating that no criminality had been established. However, many families remain frustrated, with their estates tied up in costly legal battles.

Lessons for Families

Many people were told these trusts would involve a one-time fee, yet they have found themselves paying ongoing legal costs to correct mistakes. In some cases, families have been left unable to sell or access their properties, forced to pay inheritance tax that should have been avoided, or burdened with unexpected care fees.

For those who have set up similar trusts, it is essential to seek independent legal advice to understand their implications. Estate planning should be handled carefully, with clear and transparent guidance, to ensure that families do not face unnecessary financial strain.

Article Name: Trust scandal leaves heirs with huge death taxes

Publication: The Sunday Telegraph