Official receiver winds up dubious estate-planning firm
Goldstar Law began operations in Newark in July 2012. Its business plan was to cold-call prospective clients – mostly elderly – and follow up with a sales visit to the prospect's home, at which the clients were pressured into paying in full then and there. Prices ranged from GBP95 for a single will to GBP3,834 for a package of wills, trusts and lasting powers of attorney.
Clients were told that they would receive the products within three to eight weeks, but in fact the company usually failed to deliver anything at all.
By the time the official Insolvency Service looked into the matter in October 2013, Goldstar had received GBP400,000 in advance payments from 132 clients. But it had finalised only five wills, 11 lasting powers of attorney and four 'estate preservation trusts'. These latter products are advertised (not just by Goldstar) as enabling clients to avoid their assets being used to pay for care home fees, but are widely regarded by qualified practitioners as highly risky and even ineffective if challenged by local authorities. Goldstar had sold these products without properly informing customers of the risk of their being challenged, which showed a 'lack of commercial probity', said the Insolvency Service.
The Official Receiver decided that Goldstar had failed the overwhelming majority of its customers and that there was no realistic prospect of the position improving. So it petitioned to have the company wound up under s124A of the Insolvency Act 1986, which duly happened last month.
'Goldstar Law used forceful and misleading sales practices to obtain up-front fees, from a predominantly elderly clientele, for legal products which it then failed to deliver', commented Colin Cronin of the Insolvency Service. 'From the outset of its trading, the company had accepted clients even though it had no firm arrangements in place to produce and register the legal products.'
The Insolvency Service says it will take firm action against companies which operate in this manner, possibly making it a useful recourse against 'cowboy companies' for as long as estate administration and will-writing continue to be unregulated in most of the UK.
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