ESA, DLA, Restrictions on saving

helping_hand2014

tea-bag wrote: »

They could always give it back

why would they do that if they are entitled it its there money they can do what they want with it

benniebert

Fozzgig wrote: »

Thank you for sharing that . I presume you saw a solicitor who was experienced in benefits law?

We certainly did. We wanted protection of our assets from the tax man (Inheritance Tax) as well as from Care fees that might arise in the distant future/ means tested benefits. The terms of the trust were tested against the Deprivation of Capital rules.

tea-bag

benniebert wrote: »

We certainly did. We wanted protection of our assets from the tax man (Inheritance Tax) as well as from Care fees that might arise in the distant future/ means tested benefits. The terms of the trust were tested against the Deprivation of Capital rules.

And this would stand up in court? If so why is is not all over the papers or the tv to stop assets being used as fees? You say family trust is this until the children reach a certain age? I am interested in this as I have two elderly parents who hate the fact that money could be taken for fees.

UPDATE: It is over google but don't seem a good idea.

benniebert

tea-bag wrote: »

And this would stand up in court? If so why is is not all over the papers or the tv to stop assets being used as fees? You say family trust is this until the children reach a certain age? I am interested in this as I have two elderly parents who hate the fact that money could be taken for fees.

UPDATE: It is over google but don't seem a good idea.

Yes it may well not be for everyone. The only possible catch is that you have to do it well in advance - possibly 7 years before it is likely that you will require residential/home care. The longer the time in between setting it all up and when you are likely to have problems with self caring all the better. Time is the proof that it wasn't done to get round the Deprivation of Capital rules - this only matters for moving capital or assets into it. Putting unspent income in does not bring about the Deprivation rules.


As to why it also may not be for everyone - the day to day operation and running of the trust has to be considered. This is mainly to do with tax issues and tax returns/distributions. You have to have a fairly good knowledge of how such a trust works and what are the responsibilities of the trustees.


No a Discretionary Family Trust is by it's definition, discretionary. No beneficiary is entitled to anything. Only the Trustees (my wife and I) can authorise what goes out and to whom. Our trust is set to run for well over 100 years ( if memory serves me right I think it is 250 years) so any future children of the children of our children can and will become beneficiaries too.


I wouldn't be at all surprised if that are few if any MP's that don't have this already in place. I know both Cameron and Osbourne have one. The late Tony Benn (Anthony Wedgewood- Benn) as he was, made sure that the family home was protected in this way + many £millions beside. When he died, he, like Cameron's father, on paper, had only approx £300,000 to their names. The rest, shares, property and cash, were safely squirreled away in a trust out of reach of everybody, except the trustees and the named beneficiaries.

tomtom256

benniebert wrote: »

We certainly did. We wanted protection of our assets from the tax man (Inheritance Tax) as well as from Care fees that might arise in the distant future/ means tested benefits. The terms of the trust were tested against the Deprivation of Capital rules.

I can't see how the trust was tested as deprivation of capital is a case by case decision and one only made by a relevant decision maker.

Did you pass this all through the DWP then or just make it up?

rogerblack

tomtom256 wrote: »

I can't see how the trust was tested as deprivation of capital is a case by case decision and one only made by a relevant decision maker.

Did you pass this all through the DWP then or just make it up?

The above scheme - every 3 months - is completely outside the rules for means-tested income replacement benefits, and relies on each decisionmaker agreeing that the transfer to the trust is not deprivation of capital.
Unless you have a decision in writing from the department that it's not, there is a severe risk the entirety of the money paid over will be treated as notional capital you still have.

(this does not apply to tax credits, but IS/SDA/ income related JSA/ESA/UC, HB, ...)

The reason the scheme I suggested above is possible is because it is defined in benefits law that money is either income or capital - it cannot be both at the same time.
You cannot deprive yourself of income (by transferring it to a trust).
You can deprive yourself of capital.
Income (from benefits payments) remains income until the end of the period it is paid for - only at the end of that period does it become capital.
(so, if you're paid ESA every 2 weeks, then any unspent ESA after the end of the 2 weeks is capital)

This does not require a decision by a DM to be made in your favour, merely that the DM follows the law.

benniebert

tomtom256 wrote: »

I can't see how the trust was tested as deprivation of capital is a case by case decision and one only made by a relevant decision maker.

Did you pass this all through the DWP then or just make it up?

The solicitor had confirmation from the DWP that the property could be transferred into the trust as it was (a) purchased originally from a compensation claim years ago - £234,000 and (b) it was an 'exempt' asset in any event.
The capital was the balance - £68,500 of the compensation which has been regularly topped up with excess income that we don't need - generally all of our State Pensions. The DWP confirmed that these additional monies will not be treated as either Deprivation of Income or Capital.


The LA would not give a ruling but given that the DWP have already agreed and that there will be many years from when this was all put in place, it is very unlikely that the LA in years to come will attack the set up.

cbrown372

tomtom256 wrote: »

I can't see how the trust was tested as deprivation of capital is a case by case decision and one only made by a relevant decision maker.

Did you pass this all through the DWP then or just make it up?

It's Andy, of course he made it all up :beer:

rogerblack

benniebert wrote: »

The LA would not give a ruling but given that the DWP have already agreed and that there will be many years from when this was all put in place, it is very unlikely that the LA in years to come will attack the set up.

'Very unlikely'.
The LA is not bound by the DWP decision, and can at any time decide that the majority of the money put in over the years at the very least is deprived capital, and that you have been overpaid.

Depending on your declarations on forms over the years, you may not have met your obligations as to what capital you declared, and at the best may also face a civil penalty.
Criminal prosecution is perhaps unlikely to succeed in this case.

I would strongly advise you to start paying into the trust the paid benefit money before the next benefit comes in each time.

swingaloo

Just a general question, but if they have £1300 over each month how do they manage to qualify for housing benefit?