Inheritance and Benefits (Disabled persons trust?)

KJ2886

I'm posting on behalf of my mum - she currently claims ESA and DLA (just had the forms to move to PIP) she currently gets high rate care low mobility
Also housing benefit and council tax benefit too

One day she will be due to some inheritance and my nan wants to do a will and we are confused how my mum will be one day effected by any Inheritance

Someone suggested as she is disabled she could have the money in a disabled persons trust to benefit her in the long run
How does that effect benefits?
Are there any restrictions? How do we set this up?

Thanks

[Deleted User]

PIP when/if she gets it won't be affected by capital neither would cont. based ESA, means tested benefits will be, between 6k and 16k of savings would affect benefits more than 16k would stop them except as noted above, many people will of course argue that if she inherits some money she should use that to live on, I couldn't possibly comment.

xylophone

https://www.litrg.org.uk/tax-guides/disabled-people-and-carers/trusts-disabled-people

KJ2886

Thank you, tried reading all that but it's so complicated and how it will effect my mum and maybe myself and sister who would be helping set up/manage it maybe in the future

LocoLoco

Hi KJ,


Trusts are complicated and often quite expensive to set up. I have one in place for my son because he has learning difficulties and can't manage his own money. If that's the situation your mum is in then you could contact Mencap as they have a Trust company who will set everything up and put it in place for when your nan passes and they're a lot cheaper than a regular solicitor.



If she's capable of managing her own finances then I think it depends more on how much money you're talking about. If it's a relatively small amount then she won't need a trust. If it's huge sums then you will need a specialist solicitor as it's very complicated (as you've seen from the previous article posted!). Does your nan have any idea how much money she'd be leaving?

KJ2886

Thanks for the replys, she's looking at roughly £80k (1/3 of a house with other relatives)
She can look after stuff a bit at the moment, I do her post, bills, insurances etc tho but as her condition is genetic and progressively gets worse with age want to make sure she's ok long term

My nan has an appointment with a solicitor this week as wanted to amend her will anyway but just to see if it was an option, costs involved too

TELLIT01

Your nan is doing the right thing by discussing the situation with a solicitor. She will at least then get some idea whether the idea is realistic and some sense of the costs to set up and run.

LocoLoco

KJ2886 wrote: »

Thanks for the replys, she's looking at roughly £80k (1/3 of a house with other relatives)
She can look after stuff a bit at the moment, I do her post, bills, insurances etc tho but as her condition is genetic and progressively gets worse with age want to make sure she's ok long term

My nan has an appointment with a solicitor this week as wanted to amend her will anyway but just to see if it was an option, costs involved too

Sorry to read that your mum is likely to deteriorate. It's good that your Nan's seeing a solicitor about the situation; they'll be able to give her the best advice re setting up and costs involved. When I looked into it for my son the cheapest quote I got for setting something up was over £1,000 and then I think there is some sort of fee to pay for managing the trust? But with £80,000 it would be worth doing. My son's is set up so that it doesn't affect any means tested benefits and I've included a list of things I'm happy for it to be used for, and unfortunately a list of people who mustn't be allowed to get involved as they won't make decisions in his best interests. Has Power Of Attorney been set up for your mum yet? If not, it might be an idea to get that in place now to save further complications down the line.



I think it's very sensible to plan ahead like this and get things organised, although I found it very upsetting to do so - these aren't things any of us like to think about. I hope the solicitor is helpful and you can get things organised as easily as possible x

KJ2886

It might be too much stress and hassle for my nan to sort out as she is 87 too but at least looking into it

Are trustees the people looking after the money ie myself and my sister? If we manage it would there be fees/taxes to pay?
As I'm on benefits would that effect me and my means tested benefits?

calcotti

KJ2886 wrote: »

It might be too much stress and hassle for my nan to sort out as she is 87 too but at least looking into it

Are trustees the people looking after the money ie myself and my sister? If we manage it would there be fees/taxes to pay?
As I'm on benefits would that effect me and my means tested benefits?

Sounds as if it would sensible for you to attend solicitor with your nan if if that is possible.

LocoLoco

KJ2886 wrote: »

It might be too much stress and hassle for my nan to sort out as she is 87 too but at least looking into it

Are trustees the people looking after the money ie myself and my sister? If we manage it would there be fees/taxes to pay?
As I'm on benefits would that effect me and my means tested benefits?

The way Mencap run theirs is that they have a panel of Trustees who are independent and don't know the person concerned. I've nominated a couple of friends who can have input so essentially if someone wants to take my son on holiday and wants money to pay for it (just as an example) then they can apply to the Trust; who then consult with the nominated people and the panel and decide whether to say yes or no. I don't know how it works with a different kind of trust. I would guess there is always some kind of fee to pay if the money is in a trust because someone will have to do checks and audits plus process releasing the funds when necessary. I don't know about taxes: I'd guess not as the fund doesn't earn interest so isn't an income as such? But I'm not sure how that works (although if your mum is on benefits then she wouldn't earn enough to pay tax anyway, I would have thought?). It gets very complicated!


As far as I'm aware it depends what sort of trust it is as to whether it affects benefits - the Mencap one isn't counted as income so my son can still claim whatever he needs to and then the money I leave will be used for extras for him. I'm not sure about the other ones, I think there are three main types of trust but I can't remember what they were called now?


A solicitor should be able to organise and set everything up for your Nan so in theory it wouldn't be too stressful or difficult for her; she'd probably just need to sign a form once the solicitor has organised everything.


As far as I know a trust specifically for your mum wouldn't affect anything you claim as it would be set up for your mum and so wouldn't be counted as your income but that would mean it has to be set up properly - I've known people have money come to them to look after for someone else but because it goes into their account in their name it's counted as their money regardless of the intention for it to be spent by someone else so it causes problems.


It might be worth you making an appointment with the CAB to see if they've got any information that would help and then go through everything with the solicitor as well and then take it from there. Hopefully there's a way to get it sorted that isn't too stressful for everyone to organise x