Trust Fund and Benefits

Lilacteresa

Hello
I am getting divorced and we are selling the house. My, soon to be, ex husband wants to give part of his share of the proceeds, to our two adult children. But to be used to allow me to purchase a new property. This will mean that the Trust Fund, with my children as beneficiaries, will own 30% of my new property and I will own 70%
One of my children has 2 disabled young kids and, together with his wife, is their full time carer

Would this Trust Fund impact on any social benefits?.

Many thanks

Ames

If your child is on income related benefits then the share of your house that they own would be considered capital for benefits. I don't think putting it in a trust would change that.

If you claim income related benefits, then it being in trust with them owning part of it could affect them. You'd be treated as having your share of the income from the sale of the house regardless of who actually ended up with the money.

It doesn't seem a good plan for anyone.

TELLIT01

Whether or not it would affect benefit entitlement is likely to depend on the wording of the Trust. If, for example, you have the right to live in the property it's unlikely that any part of the value would be considered capital in respect of your sons benefits claims. That's because they have no right to sell it.
You do however need to take legal advice on the setting up of the Trust and how it operates.

Danday

Lilacteresa wrote: »

Hello
I am getting divorced and we are selling the house. My, soon to be, ex husband wants to give part of his share of the proceeds, to our two adult children. But to be used to allow me to purchase a new property. This will mean that the Trust Fund, with my children as beneficiaries, will own 30% of my new property and I will own 70%
One of my children has 2 disabled young kids and, together with his wife, is their full time carer

Would this Trust Fund impact on any social benefits?.

Many thanks

For a start the first question to ask is who is in receipt of a means tested benefit.
Assuming that no one receives such a benefit.
The husband (the donor) wants to gift a part of his proceeds of the house sale to his two adult children through a trust. That's fine as long as it is discretionary trust and that the donor is NOT a beneficiary of that trust.. Presumably the husband wants his two children to be the only beneficiaries of the trust? Who are the trustees? Presumably mum and dad?
His wife then buys a property using her 50% share and the trust lends her the trust's money to make up the difference? Or maybe the children receive the money from the trust and hand it to mum? If the trust lends her the money the property is jointly owned by the trust and mum. On sale the trust will receive the same ratio of the sale proceeds for the benefit of the children That way it protects the children's' inheritance. If the children hand mum the cash then the property is jointly owned again in the same ratio by mum and the two children.
When she sells the proceeds will be divided between all three parties - children & mum.
It all depends on what the intentions are of the father. Who or what does he want to protect by using a trust?
I have something similar in place whereas the property (our home) is owned by a discretionary trust the beneficiaries are my wife and children and their offspring and their offspring. The deeds of the property are in the name of the trust. The trust has a life of 499 years. In my case not only does this make sure that my wife has access to the trust monies but that the children and their children are well looked after If and when the house is sold the total proceeds are returned to the trust. There is no inheritance tax to pay, and if either of us need care we both own £10,000 beween us for Pension Credit purposes with the remaining invested in the trust.
A trust is a legal entity in it's own right.

I would suggest that you seek help from a solicitor who is experienced in these matters as each trust is written for the individual people and circumstances - it is not an off the shelf product - it must be tied up with the contents of the will.

Not cheap to set up, but cheap when you consider what it protects and who it protects it from.