What To Do When The Company You Used To Create A Trust Arrangement No Longer Exists

Our expert Wills, Trusts & Probate team has seen a rise in the number of enquiries we have received about what a person should be doing if a company used to create a Trust arrangement no longer exists.

Recent enquiries follow the closure of various investment/Will writing companies primarily involved in the provision of Trust advice. Closure of this type of company is quite common. Many of the Trusts are set up for the purpose of long-term inheritance tax or succession planning and require ongoing management and review, so the closure of the companies that created the Trusts could leave you feeling disappointed and uncertain.

Many investment/Will writing companies will name the company or its members as Trustees. This has to be addressed when the company folds and appropriate legal documentation must be drawn up to appoint new Trustees. Commonly, these types of companies will have been taken over by a new business, which will approach you to confirm it is now in a position of control. You may not feel comfortable that a company that you did not choose, and may not be local, is now in control of your family’s assets.

How do the schemes work?

These schemes work by allowing you to gift ownership of your home during your lifetime into a Trust. The Trust will give you the legal right to live in your property rent-free for as long as you like, but if at some stage you no longer want to remain there – perhaps because you’re moving into care – your home can be sold and your Trustees can decide how to deal with the sale proceeds.

Your Trustees, who could be your children, will be guided by a letter of wishes made by you, which could, for example, ask that the sale proceeds be kept in Trust while you are alive but then be divided equally between your children after your death.

If you had put your property into Trust before going into care, then the starting point is that it is no longer owned by you. The company to which you have given it to ‘in Trust’ now owns it and therefore your home is not part of your capital and you cannot be required to use it to fund your care fees.

What steps should you take if the company used to create a Trust arrangement no longer exists?

This is a complex area of law and when a company that prepared a Trust no longer exists, it is prudent to seek independent advice from a qualified specialist solicitor regarding the Trust arrangement to ensure that:

1. The original Trust documents are safely held. Nelsons stores legal documents free of charge for our clients;
2. The Trustees named are up to date;
3. Your understanding of the Trust is correct and is appropriate for your circumstances;
4. The Trustees named are aware of their duties and have been exercising these correctly and diligently and, in the case of new Trustees, they are aware of their legal duties going forward;
5. The Trust assets have been dealt with appropriately for the duration of the Trust and no adverse tax complications have inadvertently arisen; and
6. The Trust has been reported, where necessary, to HM Revenue & Customs (HMRC).

It is only after receiving advice tailored to your circumstances that you can make an informed decision as to how to proceed. Depending on the circumstances, it may be possible to put the control of the Trust in local professionals or trusted family members, saving a substantial amount of money over the years.