How to set up trust for son ?

[Melbourneman]

Hi All,

We have a family member who is disabled and we are thinking about setting up a family trust. Does anyone know about such things ? Could housing benefit be claimed, how long does it take ? Any help would be great!

Thanks kindly

Melbourne man

[Jofisher]

Hi I believe the trust I did as part of my will for my disabled son was called a discretionary trust so it’s managed by other family members and then he can still claim his benefits. Speak to a solicitor who does wills and trusts and they should be able to help you with this

[Melbourneman in reply to Jofisher]

Hello,

Thank you for the prompt reply to my question. My son gets housing benefit to pay for his home. Would he lose some benefit if his housing costs were paid into a discretionary trust ? Do you have any idea about this I have little knowledge of this ?

Thank you

Melbourne Man

[Jofisher in reply to Melbourneman]

No sorry and I wouldn’t want to give you the wrong information the solicitor would be able to answer these questions for you

[Melbourneman in reply to Jofisher]

Thanks it's a minefield

[Jofisher in reply to Melbourneman]

It certainly is and I would also get either L.P.A.’s done or a deputyship depending on whether your loved one has mental capacity or not.

[1946timmy]

We set up a discretionary trust , using a solicitor. It was pretty simple.

[Melbourneman in reply to 1946timmy]

Hi,

Thank you for taking the time to reply to my post. I have been told that my son would lose up to half of his housing benefit if this is paid to a discretionary trust. We simply have no idea.

Thank you,

Melbourne Man

[1946timmy in reply to Melbourneman]

Do check with the info from Mencap. The discretionary trust is perhaps not what you are looking for, this is what we have set up for when we die, not for paying money into.

[dad61]

Just completed this process and it’s relatively straightforward. I can recommend a firm in Brighton, Renaissance Legal, who I discovered via a Mencap online webinar. To achieve the best position it is best written as a Disabled Persons Trust (need to be claiming PIP to I qualify). They organised our wills too. All done Over Zoom and email.

[Sarah_Mencap]

Hello

I am not sure if you are aware of Mencap's Wills and Trust Service - mencap.org.uk/advice-and-su...

They can offer you free information and guidance about planning this sort of thing.

They also run free seminars, usually across the UK but currently online. These are a chance to get information and advice (and ask questions), hear from a solicitor, and meet (or virtually meet) other families who are in a similar situation.

These seminars are really good. I went to one a few years ago (knowing absolutely nothing) and I found it really easy to understand.

You might also find this video useful:

youtu.be/YNLDq98ZR_g(Not working as expected?)

Best wishes

Sarah

[Tekaham]

Hi Melbourne Man

I am considering using Mencap Trust Company Ltd - mencaptrust.org.uk

You might look there.

I will be interested in your opinion

Tekaham

[dad61]

Re your benefits question I am pretty sure that the setting up of a trust does not affect his entitlement to benefits. As others have said do take professional advice. The suggestion of contacting Mencap legal services is a good one and the firm I mentioned Renaissance Legal do also provide free benefit advice to clients.

[Blue4rose]

Renaissance legal also have an excellent website with a lot of information/links. They also do online seminars, which are very clearly presented. We used a local solicitor in the end because Renaissance are based a long way from us, but we were very tempted to go with Renaissance anyway because of their specialist knowledge.

[SpeedyH]

Hi there. A discretionary trust is set up by a person, typically in their will, when they want to leave money or property for the benefit of someone, but they don’t want that person to own or have control over the money/property. Typically they are set up for people who would not be able to claim the benefits they need if the money belonged to them because it would put them over the income threshold. They are set up ( typically on the death of the giver), and the money/ property is paid into the trust and it can’t then be added to. Trustees are appointed to administer the trust and there are tax implications to consider.

I wonder if you are asking this question because there is a family property involved? If the only member of your family who lives in this property is your son, and the property is owned by a discretionary trust, then I’m guessing that the trust would be your son’s landlord (you would need a tenancy agreement) so full housing benefit should be payable. Alternatively, the trust can appoint a third party like a lettings agency to be the landlord.

If there are other family members in the property it becomes tricky and I would think you would be lucky to get even a proportion of housing benefit unless all the family members had their own separate tenancy agreements. Definitely seek professional advice on this one!

[HolisticMum]

Look at Mencap's site. We watched their Seminar on Wills & Trusts last year, through zoom. It's very helpful. The solicitor explained very clearly. Despite that though, it is making me feel so anxious in what to write in our Letter of Wishes. All the thoughts in my head and I can't put them on paper! Good luck.

[redsails]

I’d strongly advise you to seek out a solicitor who specialises in dealing with people with a learning disability as it can be a costly mistake otherwise. You can also get good advice from your local Carers Centre if there’s one in your area, they often have specialist knowledge regarding how different circumstances can affect certain benefits. Good luck.

[JacksDad]

Hi Melbourneman

I'm not sure all the advice in this thread is correct, but everyone's situation is different and I'm sure you realise you do need to consult a solicitor. Mencap are a great start but using the Mencap Trust for your youngster has advantages and disadvantages.

We used a STEP solicitor (Society of Trust and Estate Practitioners step.org/about-step) and set up a Discretionary Trust in 2011 such that assets passed on to our boy Jack would go into trust and not to him directly. I chose to 'start' the trust, if you like, by putting £10 in and leaving it at that. You can choose to write your will in such a way that the trust is only set up on your death. I felt happier knowing that the Trust was already up and running and as there was only £10 in it, it did not require any admin.

The advantage of assets being in trust for your youngster, as had been mentioned here already, is that they cannot be considered as part of his/her assets so do not count towards any calculation of benefits, payment of care costs by the local authority etc, as any money paid from the trust to your youngster is at the discretion of the trustees.

A few years after the trust was set up, Jack's mum suddenly passed away, and a few months later his gran too, so all of a sudden his trust had a lot of assets in it. Dealing with two bereavements, probate, wills etc in quick succession made me glad we had 'opened' the trust earlier and not left it dormant as it made it easy to have insurance, pension and other money paid straight in to the trust. It was also simpler being an executor of the wills and a trustee of the trust.

The tax position of trusts is very complicated, I am no expert, however Jack qualifies for a Vulnerable Persons Election with HMRC meaning the money in his trust is taxed as though it was his (i.e. the lowest tax you can pay as his only income is ESA/PIP) and not at the trust rates which can be much higher. More professional advice needed here!

Our situation is perhaps simpler in that there are no siblings to consider, again this introduces complexity but it can be sorted.

Good luck!

Jack's Dad