The Ombudsman’s Verdict: A ‘Living Trust’ Did Not Save This Family’s Home
The Truth About Trusts and Care Fees
For those of us in the legal profession, the alarming headlines surrounding “Living Trusts” (sometimes called Asset Protection Trusts or Lifetime Trusts) are not new. They aren’t a recent loophole. Ethical legal practitioners have been aware of this issue for a long time, tirelessly trying to spread awareness about the hidden dangers of these schemes.
For years, “Living Trusts” have been aggressively marketed on social media and through cold calls and pressure selling. They promise a quick fix to protect your home from care fees, inheritance tax, probate, the list goes on. We call them “Unicorn Trusts” because they offer a magical solution for all these areas of estate planning that simply don’t exist.
Sadly, the press is only just catching up, because it is only now that we are seeing the devastating outcomes when things go wrong. The collapse of firms such as McClure Solicitors and Philips Trust Corporation has left thousands of families untangling arrangements they were told would protect them. Others are finding out, too late, that the promises they were sold do not hold up.
Why “Living Trusts” Aren’t What They Sound Like
The root of the problem? The word “trust” is used far too broadly, often with little clarification or context. There are hundreds of different types of trusts, and not all of them operate in the same way.
But let’s be clear. So-called “Living” or “Lifetime Trusts” all involve one thing: losing ownership and control of your home.
Transferring property into a “Living Trust” to avoid care fees is dangerous. These “tactics” are often regarded as the deliberate deprivation of assets by Local Authorities and can be challenged and reversed, resulting in serious unintended legal and financial consequences for your family.
The warnings are not new. As early as 2013, Age UK reported that tens of thousands of people had been mis-sold asset protection trust schemes, some paying up to £10,000. Two of the leading professional bodies in this field have since issued warnings of their own:
- STEP, the professional body for trust and estate practitioners, warns that schemes sold to shield assets from care fees “may be challenged as deprivation of assets”. STEP is clear that this concern applies to lifetime transfers, not to Will trusts, which take effect only after death.
- The Association of Lifetime Lawyers, warns of a “trust mis-selling scandal”. Its research found that 95% of the specialist lawyers it surveyed had encountered cases of trust mis-selling, and that most victims paid between £3,000 and £5,000 for products offering no legal protection.
When the Trust Was Tested, It Failed
On 28 April 2026, the Local Government and Social Care Ombudsman published its decision in a complaint against Stoke-on-Trent City Council (case 25 011 990). It is not a headline-grabbing court judgment. It is something quieter, and for anyone who has been offered a “Living Trust”, rather more important.
In 2019, a lady, then aged 85, referred to as Mrs Y, placed her home into a trust. Her daughter had died earlier that year. The aim, her family say, was simply to make sure the house would pass to her granddaughter and son-in-law.
They sought help, they paid for a professional arrangement, and they did what they were told would protect the family home. That is precisely what makes this case matter.
In November 2024, Mrs Y had a fall. She was admitted to the hospital and discharged with a recommendation of 24-hour care in a care home. When the Council carried out its financial assessment, it looked straight through the trust and concluded that placing the home into it amounted to a deprivation of assets.
Her granddaughter complained to the Ombudsman, arguing that the Council had ignored supporting medical evidence and overturned a lawful trust. The Ombudsman found that the Council had reached its decision in line with the relevant law and guidance, without fault.
A couple of details that should give every homeowner pause, and each one of them points at the provider rather than the family:
- The Council concluded that “a Will would have achieved this same goal” of passing the property to Mrs Y’s chosen beneficiaries, without any need to give her home away during her lifetime. A far simpler arrangement was available. It was not the one she had been sold.
- The provider’s paperwork included a disclaimer, signed by a family member, confirming their understanding that a trust would not protect the property against a council claiming care costs. The small print conceded that the trust would not do the very thing these schemes are sold to do.
It is worth being precise about what this decision does and does not do. The Ombudsman is not a court. It does not rule on whether a trust is valid, and it says so plainly.
What it does confirm is that a council can decide that a lifetime trust amounts to deprivation of assets, and that where the council has followed the proper process, there is no route to overturn that decision.
The trust did not stop the home from being counted. It left a family to discover, at the worst possible moment, that the protection they had paid for was never really there.
One council. One decision. But the principle it turns on is not confined to Stoke-on-Trent. Any arrangement that asks you to give up your home during your lifetime rests on a promise that a local authority is entitled to test. When it is tested, it is the family who must argue the point and pay to do it.
We have taken a different view since 1991. In 35 years, we have never drafted a Living Trust, and we never will.
How April Wills® Work, and Why They Are Different
The alternative to giving your home away is not to do nothing. It is to plan properly, within your Will.
We will never advise you to give away assets or ownership during your lifetime. Your home stays in your name, and you stay in full control of it, for as long as you live. The protection only comes into force once the first of a couple has died. That is the whole difference.
As STEP makes clear, the deprivation of assets concern surrounding “Living Trusts” applies to transfers made during your lifetime, not to trusts created by a Will.
Our April Wills® provide:
- Guaranteed security. The survivor has a protected right to live in the property for the rest of their life. Your children effectively look after the deceased’s share, but they cannot force a sale or evict the survivor.
- Flexibility to move. The survivor is not trapped. They can sell, downsize, or move. The protected share simply follows them into the new property.
- Re-marriage protection. In England and Wales, the act of remarrying cancels the existing Will of the person who remarries. Most people are surprised to learn that a new spouse then usually becomes next in line to inherit, ahead of their own children. Because your half of the home has already been ring-fenced, it stays with the beneficiaries you chose. It cannot pass sideways out of the family.
Timing is what matters. Once one partner has died or has lost mental capacity through a stroke or similar, this planning is no longer possible. Couples need to act while both are able to.
35 Years of Doing It Right
At April King, we have specialised in Wills, Trusts and Probate for over three decades. We have never offered or endorsed Living Trusts, based on strict legal and moral principles. We believe you should never have to relinquish control of your home, navigate hidden fees, or risk accusations of deliberately depriving yourself of assets just to protect your hard work.
As a family firm, we could never provide you with something we would not do for our own family. It is a simple test, and Living Trusts have never passed it. Instead, since 1991, we have offered legitimate, flexible and affordable planning that keeps your home in your name and your bloodline.
Unlike many living trust providers who weave themselves into your deeds or act as professional trustees to extract ongoing fees, your home remains entirely yours and your family’s. We don’t take a stake in your estate.
Our CEO, Paul King, is a full member of STEP (the Society of Trust and Estate Practitioners) and holds the TEP designation.
If you have an existing Will prepared elsewhere, especially one more than a few years old or drafted by a generalist firm/individual, we urge you to get a second opinion. Let us show you how exposed your hard-earned assets may be and, more importantly, how we can help. We offer a free, no-obligation review to discuss your situation in plain English, without jargon.
If you already have one of these arrangements in place, you are not alone, and it is not too late to seek advice.
Get in touch with our friendly team today to schedule your review or to request our free legacy guide. Let our family help protect yours.
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. No responsibility is accepted for any action taken or not taken based on the content of this article. Readers should seek appropriate professional advice tailored to their circumstances before making decisions. April King Legal will not be held liable for any loss or damage arising from reliance on this information.
