Discretionary Trust No-Risk Investment.

Gillyc1967

Unfortunately I inherited a substantial sum of money 6 years ago when sadly my dear mother passed away. This money is held in a Discretionary Trust for myself as beneficiary with both myself and my brother being trustees. I am disabled and unable to work and consequently claim ESA and this was the only way that the bank (HSBC) advised that the money wouldn't legally be mine and therefore wouldn't have an effect on my benefits claim.
However, the money has been invested for the past 6 years with the HSBC in a Money Market account earning very little interest (I can't remember the exact rate, but it earned £196.30 net interest last year on an investment of a little over £44600.) Obviously I feel like I am being ripped off and would ideally like a much bigger return on my investment, with very low (if any) risk.
So my question is, does anybody know a better way that I could invest this money which is low risk and keep it protected within a Discrety Trust to give me more return on my money?

Many thanks, Gill

JohnRo

Are you "support group" contribution based ESA?

dunstonh

Obviously I feel like I am being ripped off

How are you being ripped off as I see nothing obvious in what you have said?

would ideally like a much bigger return on my investment, with very low (if any) risk.

Wouldnt we all. No such thing exists. Risk is not on/off. Its a sliding scale. You seem to be focused on investment risk but in the meantime have left yourself open to inflation risk and shortfall risk and over 6 years that would put you in a worse position than had you taken on a sensible investment risk level.

So my question is, does anybody know a better way that I could invest this money which is low risk to give me more return on my money?

Does not exist.

Gillyc1967

I've got no idea, but I am being hounded by the Job a Centre to get a job when there aren't any even for able-bodied people. What does 'Support Group contribution based ESA' mean?

JohnRo

I suggest you take a bit more of a keen interest in what benefits you're getting and what you're entitled to because the environment has got a whole lot uglier for genuinely disabled people and their benefits and you'll end up out in the cold if you don't get pro active.

Have you ever paid national insurance contributions?

There are two types of ESA - work related and contribution based, there are also two further categories, the work related group and the support group. Depending which group you're placed in the amounts, time scales, financial rules and pressure applied will change.

If you're been hounded by the "job" centre that sounds like work related ESA, presumably you've done the 10 second arm flap test and been found fit for work?

xylophone

Trusts and Trust taxation can be complex - you may well need specialist advice.

http://disabilitytaxguide.org.uk/other-tax-issues/trusts-for-disabled-people/

It is possible for the Trustees to invest in a variety of assets as well as cash - some building societies and banks permit trustee investments for some products - you need to check with each provider - however, the return on cash deposits is not very high at the moment.

It would be possible for the Trustees to hold stock market investments in trust.

Re ESA http://www.benefitsandwork.co.uk/employment-and-support-allowance/esa-glossary/1486-what-is-esa

Gillyc1967

Yes, I've paid NI Contributions but not since 1993 when I became disabled, so unsure whether they count regarding the reason why you are asking or not?

Sounds like I'm in the work related group. I did go for a medical assessment where a so-called medical 'expert' found that I had 'no limited capability to work', which I appealed against with the help of the local CAB, and won the right to keep my ESA, presumably until they decide to take it off me again. But I am still expected to find myself a job & compete for (& get) it against able bodied people. I've just remembered that I'm in the work related activity group if that helps.
I trust this answers your questions, sorry but the Benefits System confuses me!

Thanks for taking the time to try and help...

JohnRo

The only reason I've mentioned and asked about whether you are paid Contribution based ESA and if you're in the support group is because those two elements would exempt you from means testing.

Because you're in the work related activity ESA/group your savings and any income are means tested so the discretionary trust, on the face of it, is doing exactly what it was intended to do, sheltering that capital from any means testing.

Whether an investment in a money market fund is suitable for your needs is a whole other discussion. I suspect not but it would need to be carefully considered.

Gillyc1967

Thanks JohnRo,
Your last paragraph was exactly what I was asking and whether anybody knows of anywhere more suitable for me to invest my money, the interest I'm getting on my money seems pitiful.

Thanks for taking the time to try and help me.

tomtontom

You're claiming means tested benefits whilst using a loophole to hide £45K from your assets. Are you sure it is you that is being ripped off?

JohnRo

Gillyc1967 wrote: »

Thanks JohnRo,
...whether anybody knows of anywhere more suitable for me to invest my money, the interest I'm getting on my money seems pitiful

It is pitiful, the dilemma you have to face though is being prepared to take on risk and that means potential rewards will come at a cost, at the very least you will experience volatility and there will be periods where your invested money is showing a paper loss in the short term. The thing to overcome is fear of those eventualities and accept them as all part of the investment process.

Personally I'd be looking at an investment in a UK centric collective equity income fund that pays a dividend yield around 3% to 4% annually and has a reasonable chance of capital growth as well. Something like the Woodford Equity Income fund is an option but there are others.

I don't know anything about HSBC or what arrangement HSBC have with you, presumably you've got an investment bond held in a discretionary trust via their Investment Centre?

First thing is to look into what exactly the account type is and what alternative investments/funds HSBC are able to offer, also look at what they're charging because their headline 0.39% charge plus fund charges on top might explain why the return from the money market fund is so pitiful. There are cheaper and better alternatives than the HSBC Investment Centre.