Limit on Discretionary Trust

Roods

My mother in law has stipulated in her will that her son, my brother in law is to be left a discretionary trust fund of £40,000 to be administered by his three sisters. He has quite severe learning disabilities and receives Universal Credit, housing benefit and EESA. My question is: Is there a limit that can be left in a discretionary trust fund, without my brother in law losing his benefits? One family member seems to think that there is an upper limit of £16,000. 

BriNylon

Provided the trust is fully discretionary, then, no.  There is no limit.  If brother has absolute entitlement to any money from the trust his means tested benefits will be affected.
Generally, such trusts are discretionary and the trustees will make distributions from the trust so that his means tested benefits are not affected.  If they make distributions in excess of £16,000 then his means tested benefits will be affected.  If the money is retained in the trust, then his benefits will remain intact.

Albermarle

As it is in a trust, it does not belong to him, so does not count when calculating benefit entitlements. 

BriNylon

Albermarle said:

As it is in a trust, it does not belong to him, so does not count when calculating benefit entitlements. 

Not necessarily.  Trust funds are only disregarded if trust isn discretionary.  If there is any absolute entitlement in the trust either to income or capital, it will be brought into account.  This type of trust is generally known as a life interest or fixed interest trust.