Universal Wealth was an unregulated company owned and run by Steven Peter Long and his wife Melanie Long.
Universal Wealth targeted a pool of individuals within the age bracket of 60-80, convincing them to put their properties and savings into Universal Wealth Trusts to protect their estates from future care homes fees and inheritance tax – what they didn’t expect was a massive capital gains tax bill when it came to selling their properties!
The company director, Steve Long, was sent to prison at the end of 2018 for breaching court orders and failing to provide bank statements and failing to disclose his assets worldwide.
During Court proceedings, barrister Oliver Hyam told the court: “Large sums of money…cannot be located by the settlors or beneficiaries of a number of trusts. Overall, around £25 million is thought to be missing.”
Universal Wealth often recommended to clients that they be appointed as the trustees of the assets placed into trust together with the clients, meaning that these assets were, in the case of money, transferred into the control of the Trustees. This led to the registration of the Longs as Trustees of the property and the registration of an equivalent charge at the land registry.
Universal Wealth ceased operations in 2018 leaving many clients unable to access their money and with difficulties in selling their homes, as permission of the trustees would need to be sought and the operation of the charge created difficulties.
Normally, there is an exemption in law applied to main residences meaning that no capital gains tax (CGT) is paid when the property is sold. However, the effect of the wording of the Universal Wealth charge (which was standard wording used across the board with these trusts), removed this exemption. This means that, on sale, clients who put their properties into these trusts will be liable to pay CGT on the full value of their home (not just the increase since the home was first purchased). For clients who purchased their homes years ago and with property prices increasing, this creates a significant and unforeseen liability.
IDR Law have been working with former clients of Universal Wealth to remove their properties from the trusts and therefore remove any CGT liabilities.
IDR Law client comments: “Unfortunately, the inept wording of the trusts had created this tax liability. What was also not clear was that every 10 years we would have been liable to pay an annual tax bill on the value of the property – this was expressed as a nominal fee every 10 years. You would have to be very rich indeed to regard somewhere in the region of £30,000 pounds as nominal!
“The impact on us was devastating, such charges would rapidly eat into our life savings and leave us nothing to pass on to our son who would be forced to sell the family home to cover these debts… Fortunately, our solicitor put us in touch with IDR Law, who specialise in such problems, and, with their help, we finally managed to extricate ourselves from this invidious position.”
Having now helped a number of families, including the first favourable legal judgment in support, our approach has been to prepare issue Court proceedings to request the Court consider matters on paper and removal of the legal charge that places the property into trust.
The key to success of such an application is showing that on balance, the tax mistake was not intended and has adverse consequences to the client and as such, it would be unjust for the legal charge to remain in place.
Universal Wealth did not advise clients of any CGT risks and, in paperwork we have reviewed, Universal Wealth confirmed no CGT was payable. We believe a significant number of former Universal Wealth clients remain unaware of the issue of this charge.
Martin Holdsworth, founder and director of IDR Law, commented to the Express: “We suspect that this is the tip of the iceberg and that there could well be hundreds if not thousands of families with their properties sitting in these Universal Wealth Trust and Legal Charge schemes and completely oblivious to the 10-year tax charge they are liable for on those trusts. To ensure we can assist as many families as possible, we have set up a triage system here at IDR Law that has been designed to provide free initial advice to any of the estimated 8,000 families affected by the Universal Wealth.”
If you or your family have been affected by Universal wealth get in touch with our team at IDR Law and we will let you have our initial case questionnaire to assess whether we can help – if we can, we will!.
IDR Law is an approachable, boutique firm of contentious probate specialists. If you’re a law firm, or an individual who feels they would benefit from our expertise, get in touch here, email us at firstname.lastname@example.org or call on 01423 637050.