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Personal Injury Trust - Skipton

Wondering if anyone has any advice on this. My mum received a lump sum of compensation from a Personal Injury claim. She receives benefits so was advised to put this money into a Personal Injury Trust so it wouldn't affect her benefits. She done this with Skipton. My mum lives at home with her partner and the house is bought (subject to mortgage). My mum's name isn't on the property/mortgage because she was on benefits at the time of the purchase and would have been unlikely to be accepted by the lender. My mum now wishes to pay off the remainder of the mortgage with the funds in the PI Trust. Following this, her and her partner intend to transfer half the title of the property into my mum's name (but obviously this is unable to be done until the mortgage is paid off because the lender would have to agree to this). Skipton are refusing to pay the mortgage because the funds are technically being paid into my mum's partner's name and he is not a beneficiary of the Trust. However, I have had a look at the Trust terms and it states: "payments from the account must be made payable in the name of the trust or the beneficiary/beneficiaries, or for the benefit of the beneficiary/beneficiaries".
Arguably, my mum has lived in the property for 20+ years, she makes contributions to the mortgage payments and everything else (council tax etc is in her name) therefore this is for her benefit? What are peoples thoughts?

Comments

  • xylophone
    xylophone Posts: 45,426 Forumite
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    I wonder if you consulted a conveyancing solicitor  would he be able to arrange for the money to be paid to his client account  for

    transfer to the mortgagee so that he could then arrange for the reregistration of the property in the names of your mother and

    her partner (presumably as tenants in common)?

  • Malthusian
    Malthusian Posts: 11,053 Forumite
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    I agree with Skipton. As it stands it sounds like Skipton could pass the money to the partner, he could then pay off the mortgage and then say he thought it was intended as a gift.

    Are they married? (I'm guessing not, but worth asking.)

    Arguably, my mum has lived in the property for 20+ years, she makes contributions to the mortgage payments and everything else (council tax etc is in her name) therefore this is for her benefit?

    It sounds to me like she has already acquired a beneficial interest in the property. Generally, when someone contributes towards a mortgage and other costs of property ownership such as maintenance / renovations, they become entitled to a share of the property proportionate to the amount contributed - unless there is a very clear formal agreement in place that says otherwise.

    What it says on the deeds / Land Registry does not necessarily reflect who beneficially owns the property.

    How much her beneficial interest might already be is a question for a solicitor. It may well be reasonable for the partner to formally transfer half to her while agreeing that this accounts for any beneficial interest she already has and will acquire by paying off the rest of the mortgage. But they need proper legal advice. 

    We can't even begin to guess whether it is a fair deal for her to pay off the whole of the outstanding mortgage using funds from the PI trust and receive a half share in return. It depends on how much she has paid towards it already, the value of the house, the beneficial interest already acquired (if any) and the mortgage balance.  

    If she has already paid so much towards the mortgage that she is entitled to more than half, then he would be trying to diddle her by suggesting they put her on the deeds as a 50% owner. I'm not suggesting this is happening - if they have been paying the mortgage together since she moved in, it's unlikely. I'm just illustrating why it is not clear cut that withdrawing the money to pay off the mortgage would actually be to her benefit.

    All of the above assumes they are unmarried. If they are married the house would be marital asset and the mortgage would be a marital debt, so the question of who owns how much would be a philosophical one.

    It sounds to me like they need to sit down with a solicitor and work out how much the mother should be paying to her partner in exchange for establishing a 50 / 50 ownership of the property. Then they will know how much would be needed from the trust for her to make that payment. That much would be in her interest because she would receive equity in the property in exchange. Paying off his mortgage is, by itself, in his interest, not hers. Nor is it in her interest to hand over money in respect of a part-share she already owns.

  • Seems to me Skipton are doing their job to protect the integrity of the trust in ensuring your mother's continued access to means tested benefits is not compromised by advancing funds other than for her primary benefit. 

    Theses personal injuries trusts must also  follow the strictures imposed on disabled persons trusts (for tax purposes) and for the paramount  protection  of the funds for the beneficiary's long term benefit.

    Of course, your mother could simply request a capital payment be made to her for the purpose of buying a formal equitable interest in the house, although as indicated Malthusian she may have already acquired such an interest over the years. However, there will be the distinct risk of adversely affecting her means tested benefits by virtue as such an advance . 

  • Malthusian
    Malthusian Posts: 11,053 Forumite
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    poseidon1 said:
    However, there will be the distinct risk of adversely affecting her means tested benefits by virtue as such an advance . 

    As I understood it the mother was no longer receiving means tested benefits ("she was on benefits at the time of the purchase", emph added) but it would be good if the OP could clear that up.
  • eskbanker
    eskbanker Posts: 35,345 Forumite
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    poseidon1 said:
    However, there will be the distinct risk of adversely affecting her means tested benefits by virtue as such an advance . 
    As I understood it the mother was no longer receiving means tested benefits ("she was on benefits at the time of the purchase", emph added) but it would be good if the OP could clear that up.
    OP does also use the present tense:
    Trust_Y said:
    She receives benefits so was advised to put this money into a Personal Injury Trust so it wouldn't affect her benefits.
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