Delay a maturing trust?

play2day

I hope somebody can advise on the following problem.

My friend’s daughter has money in trust that was left to her by her grandmother. She is currently on benefits and has a baby daughter. The trust is due to 'pay out'. If the beneficiary takes the money she will lose her benefits and will need to spend her inheritance on day-to-day living expenses.
The trust is invested in a property that is unsuitable for the beneficiary to live in. It is rented out and the proceeds are paid back into the trust.

Can anybody advise if any of the following suggestions are legal? (we will take advice but i wanted some opinions on options first)

1a: Could the trust be delayed from paying out until the beneficiary is in a position to be able to work full time and get a mortgage so she can use the inheritance as a deposit?

1b: If this were to happen and she was aware of the trust would any benefit payment to her be fraudulent?

1c: If this were to happen and she didn't know about the trust would any benefit payment she receives be fraudulent?


2: If there is no way to delay the payout and the beneficiary agrees could she pass the trust to her own daughter?

2b: What are the implications of doing this on her own benefits claim?


3: The rental income on the property is much less than the rental the beneficiary needs to pay on a suitable property. If the beneficiary declares the income and registers as self-employed could she then legitimately claim working tax credit and housing benefit or would the asset of the property itself prevent this?

Any other suggestions please!! I am sure Grandma would not have intended for the money to disappear on day-to-day expenses....

benood

You need to look at the trust deed to see what flexibility it allows, ultimately the trustees are responsible for paying out the beneficiaries - if they don't pay out then the daughter is in the clear - however they might need to be relaxed about being in breach of trust!

RayWolfe

Benefits are paid to people who cannot look after themselves. It seems eminently reasonable that if this lady receives an inheritance, she can look after herself and she should not be considering sponging on others.
Does no one have morals any more?

play2day

Thank you both for your reply.

My first reaction when I was told of the situation was the same as RayWolfe but further consideration has made me change my mind.

If the young lady takes her inheritance now she will have approximately two years benefit free before she uses up the cash. Even if she returns to work full time in two years as soon as her baby is in nursery she will not be able to earn enough to raise a deposit and mortgage and so it is likely she will live and raise her child in social housing subsidised by housing benefit ever after.

If she is not made aware of her inheritance and returns to work in two years time the trust will have earned enough money to make a sizable deposit on a small property. Her wages would cover the mortgage and therefore she will lift herself and her child out of the benefit trap.

So if the beneficiary can claim 2 years worth of benefits and then be off them for a lifetime it seems to me to be less of a drain on society than her managing two years off them only to return.

Benood - the trust deed does not specify an age or a date on which it must be paid. The trustees simply assume they must pay it to her as she becomes an adult. Does this make a difference?

Can anyone else help with the original question?

benood

I expect she could sue the trustees to get her inheiritance but if she doesn't sue them then they remain trustees and it is all outside her control - I reckon it would be difficult to go after her to recover the benefits.

I don't really agree with RayWolfe on this, if I gave someone a legacy in my will I would want them to take whatever reasonable steps they could to avoid it going to Gordon, if I'd wanted that I could have just a bit extra to the government!