Discretionary Trust Funds and Deprivation of capital

rogerblack

neverdespairgirl wrote: »

The guidance states:

Pending the completion of the administration, a beneficiary without a specific bequest (a residuary beneficiary)

They are not a residuary beneficiary - they would be if they were not named in the will.
They are named, so they are treated as actually having the capital from the date of death, as it will be available to them at some future time.

robus

Gide wrote: »

Thank you for the replies. A little more confusion. I received the following (abridged) from a lawyer: comments welcome.

You could draw up a Deed of Variation varying your mother's Will so that your share was left on discretionary trust by her.

Alternatively, you could draw up a Deed of Variation varying your mother's Will so that you are deleted as a beneficiary and your share is left on discretionary trust to benefit your disabled child.

The rules as to deliberate depravation of capital are unclear. However, you have a greater chance of success if the trust is set up by a Deed of Variation rather than set up by you personally.


Also, I would consider that the arguments for setting up a discretionary trust for your disabled child is a stronger argument since you can state that one of the purposes of the trust is to manage money because your child will never have sufficient mental capacity to manage their own finances.


It appears that the only reason for setting up the discretionary trust for your own benefit would be to be able to still claim means tested benefits.

If the DWP did decide that this was a deliberate deprivation of capital, you can always appeal the decision to an independent benefits tribunal.


To answer your questions:


1. If you receive your inheritance and then set up a discretionary trust fund, I consider that this would be seen as a deliberate deprivation of capital.

Correct! With the will set up as it is, the inheritance belongs to you. What you then do with the money is your choice and responsibility.

2. The best option would be to vary your mother's Will so that your inheritance passes direct to your disabled child with the Deed of Variation setting up the terms of the discretionary trust. I cannot guarantee that this would not be treated as a deliberate deprivation of capital but there are stronger arguments for saying that it is not.

The only person who needs to agree to the Deed of Variation is you. The other beneficiaries do not need to agree since it doesn't affect their share of the estate.


Decisions about deprivation of capital are down to the discretion of an individual decision maker.

Again correct! The 'Variation' changes what the will could have said as regards your portion of the inheritance. Of course you are still giving up 'your rights' under the will, but it will stop you receiving the money.
With the trust set up at the same time, the monies would then be passed directly across.

I agree the DWP & LA could still challenge the actions, but they would have to show that there were reasonable grounds to suggest that you carried out this action in order to secure a means tested benefit.
If in your case the only reason that you are doing it is to provide for the child and never once considered what the effect would be on any future benefit claim, then I feel that they would have one hell of a job trying to prove otherwise, if you kept on repeating what you have said about the child's disabilities.

At the end of the day, doing nothing is out of the question, carrying out the actions primarily and only because of the child gives you a much better chance of securing the capital for the child.

I did exactly what you are considering a year or so ago when I unexpectedly received a £63,000 inhertitance due to the estate of a distant relative.
I varied the will for my portion of the inheritance and arranged for it to be paid straight into a Discretionary Trust for the benefit of my grandchildren's future education and needs.

I still carried on to claim Council Tax Benefit as I stuck to the argument that I never gave it a thought that I would be allowed to continue to claim the benefit. I told them that I believed that I would not be able to claim any more Council Tax benefit! I wrote to them telling them that my claim was to cease.
They did try to pin me down what my thoughts were at various times, but I gave them no evidence for them to use against me.

robus

neverdespairgirl wrote: »

DMs have to decide if the claimant's or partner's significant purpose was to get benefit or more benefit.

Exactly!! They have to show that there are reasonable grounds to conclude that.

What goes through somebody's mind is one thing. Getting the evidence to show that the claimant had those thoughts is another.

neverdespairgirl

rogerblack wrote: »

They are not a residuary beneficiary - they would be if they were not named in the will.
They are named, so they are treated as actually having the capital from the date of death, as it will be available to them at some future time.

A residuary beneficiary is one named in the will!

rogerblack

neverdespairgirl wrote: »

A residuary beneficiary is one named in the will!

I was interpreting from the decision makers guide, in error.