Vulnerable adult discretionary trust?

louBlou21

I am physically disabled and receive both income related benefits (esa, hb, ctb), dla, and financial support to employ carers (dp, ilf). My care needs amount to about £30k a year and my benefits to support living expenses (inc rent & council tax) to around £20k.
My Dad passed away and there is the possibility of my receiving some inheritance (about £90k) which would cover my living & care costs for around 18mths. The difficulty is that the disability and care support rules are changing in the next couple of years, for example the ILF is now closed and the eligibility criteria altered which would effectively mean I wouldn't qualify once my inheritance ran out as my net care package doesn't come to enough even though my care needs remain the same.
Does anyone understand the discretionary trust for vulnerable adults rules with regards to putting my inheritance in that so that I could use it for other things such as buying new equipment or doing adaptions, and still maintain my care support? I certainly don't mind covering my living expenses myself but I don't think my Dad meant for me to be worse off with regard to my care needs after getting an inheritance!

Any ideas or help?

Indie_Kid

I think you're on about this/ ?

louBlou21

Thanks Indie Kid!
you wouldn't happen to have any knowledge about wether direct payments or independent living fund ignore this sort of trust would you?
I'm pretty sure for the purposes of employment support allowance, housing benefit and council tax benefit trusts are not counted as income but I'm not sure about the care side of things

rogerblack

louBlou21 wrote: »

Does anyone understand the discretionary trust for vulnerable adults rules with regards to putting my inheritance in that so that I could use it for other things such as buying new equipment or doing adaptions, and still maintain my care support? I certainly don't mind covering my living expenses myself but I don't think my Dad meant for me to be worse off with regard to my care needs after getting an inheritance!

Any ideas or help?

Unfortunately, there are two separate issues.
Firstly, there is the trust issue - what you can setup as a trust legally is a whole involved question that is likely unfortunately, irrelevant.

The important issue is that your dad did not make a will setting up this trust.
If he had, then the money may have been entirely ignored from a means-tested benefits point of view.

Unfortunately, now you are in the position that you can't turn back time.
Once you have become entitled to the money - even if you vary the will to put it into a trust, or pay it directly into the trust without it touching your bank account - as you have had legal access to it - you will be counted as having had it.

Paying it into a trust will make absolutely no difference (other than it may make your life extremely difficult), as you will be assessed as still having that money, and your benefits paid on that basis.

The 'best' you can do is to spend the money on reasonable adaptations and things to reduce your ongoing expenses, until it gets to the 16K limit for most means-tested benefits, at which time you can reapply and get some (reduced) amount.

How you spend the money is likely to be looked at when you come to reclaim benefit - if you have spent it recklessly or not frugally, you may be treated as if you had part of it remaining.
If this part remaining exceeds 16K, then even with no savings remaining, you will not be entitled to means tested benefits.

bll78

I've never heard of this but it looks interesting. Sorry for hijacking the thread but I have a question too if that's ok. Is it something you can only set up as part of a will arrangement, or can it be set up in other circumstances?

confuseddaughter_2

I thought after reading up on this a while ago that the only purpose of one of these types of trusts is where taxation is involved. I believe that any type of trust that is set up after receiving some money will for benefit purposes, be ignored. The money, even though it is in this trust will still count as being available to spend and assessed as available income when calculating any means tested payments. If I'm wrong, then to me, it appears that it is a way of hiding money.

rogerblack

confuseddaughter wrote: »

I thought after reading up on this a while ago that the only purpose of one of these types of trusts is where taxation is involved. I believe that any type of trust that is set up after receiving some money will for benefit purposes, be ignored. The money, even though it is in this trust will still count as being available to spend and assessed as available income when calculating any means tested payments. If I'm wrong, then to me, it appears that it is a way of hiding money.

It's not hiding money if the government specifically legislates for it to happen.

As an example.
Child living on income-based ESA - never likely to be ever able to work again due to their condition.

Will them (say 45K) directly, and it disqualifies them from ESA - which they may have had great trouble and stress qualifying for. (and also HB)
They then have to spend prudently the money (nomatter what their mental state) or they risk when they come to requalify for ESA that it's held that some of their spending has been frivolous.
If this is the case, then they may not be entitled to benefit at all for an extended period.

Put the money in an appropriate trust, and it can pay certain bills - for example grocery, electricity, gas - to meaningfully improve their life for a long time.

This is no more 'wrong' than proper inheritance tax planning is.
Ask any member of the house of lords if inheritance planning is wrong.

confuseddaughter_2

rogerblack wrote: »

It's not hiding money if the government specifically legislates for it to happen.

As an example.
Child living on income-based ESA - never likely to be ever able to work again due to their condition.

Will them (say 45K) directly, and it disqualifies them from ESA - which they may have had great trouble and stress qualifying for. (and also HB)
They then have to spend prudently the money (nomatter what their mental state) or they risk when they come to requalify for ESA that it's held that some of their spending has been frivolous.
If this is the case, then they may not be entitled to benefit at all for an extended period.

Put the money in an appropriate trust, and it can pay certain bills - for example grocery, electricity, gas - to meaningfully improve their life for a long time.

This is no more 'wrong' than proper inheritance tax planning is.
Ask any member of the house of lords if inheritance planning is wrong.

Thanks, but surely if the person was to spend the inheritance at the same rate that they were receiving benefits the DWP couldn't raise any argument and once the capital was below the upper limit, they would have no problems being awarded it again.

Meri

Hi I have been through this issue, my mum died and although she did set up trust many years ago it was not a specific disabled person trust, if she had done that it would not have affected my benefits as the trust manages the funds for payments that would benefit me such as for equipment or a holiday. You cannot do this retrospectively.


Re spending the inheritance you do have to be careful as if you spend it deliberately to get benefits again its seen as disposal of assets and you will be counted as still having the money even if you do not.


But you can spend it on normal living costs, you can give away up to £1000 to a son or daughter as one off ( but think there is £3000 limit) you can buy equipment you need or have adaptations.


My funds will run out and I will have to reclaim certain benefits unless I can manage till get my pension.


I also have direct payments for care support, I was very worried the money would affect that re charges for care but you can offset that by listing your disability related expenditure. I did lose ILF but council stepped in and increased my care package to same amount, even a little more.


Its scary, I know, but even though you will lose means tested benefits you will not lose all your care support, and the £90,000 can last quite a few years if invested wisely.


Contact your local authority or look on their website about charges for care, and start listing and keeping receipts for all disability related costs, so even if there are charges for care much of this is offset.


Ensure you contact DWP about when you get inheritance as you could be fined if this is delayed.


Setting up a trust now will make no difference to your benefits but do get legal advice on this to be absolutely sure, but my legal advice was no its too late.


I did find I could get discounts on council tax due to being disabled, you can also get prescription charges exemption card, and various other help even though you will not be on means tested benefits.


You will lose ILF which I did too, immediately, and you must get council to do new care assessment on you, mine stepped in and paid emergency amounts till they sorted new assessment, and did financial assessment.


It was the care bit that scared me so much and the carers I employed but in the end I still receive the same care support and pay no fees.



When you have never had much money its a steep learning curve on how best to make the most of it, what savings accounts etc but this site helped me so much.

I hope this helps.


meri

Mojisola

Meri wrote: »

But you can spend it on normal living costs, you can give away up to £1000 to a son or daughter as one off ( but think there is £3000 limit) you can buy equipment you need or have adaptations.

You can spend on day-to-day living and you can buy equipment, replace white goods, furniture, etc, but you cannot give money away.

The £3000 limit is only to do with inheritance tax - if you give away money and then try to claim benefits, you can be assessed as still having that money.

louBlou21

Thanks everyone, this is all really helpful. My Mum would set up the trust with trustees before I would receive any money and I would have to apply to the trustees for any funds.

Interesting that your council stepped up Meri to cover the loss of ILF as employing my carers is my major worry, not only as I don't know how I'd manage without them but also because they rely on the employment.

I know people think you can just re-claim for benefits lost but as you've seen recently Govt changes the application criteria all the time and other things affect it too such as your age so possible to be in worse straits once the money is gone, especially if there's another change of Govt!