We are about to purchase a house through a discretionary trust for our autistic son to live in rent free. Is he liable for his own bills, council tax, energy, broadband and contents insurance?
Are the trustees just liable for maintenance and building insurance?
Her shouldnt be liable for CTax. The trustees usually take on liability for the maintenace of the property
Thank you for your response jollyfarmer
I’m not an expert. However, I believe you can use the discretionary trust to hold the property and your son rents it from the trust. He is then entitled to housing benefits to pay rent and other benefits to cover other day to day living costs. It is important that the ‘discretionary’ trust only pays for things on a discretionary basis i.e. for one off things not normally covered by benefits. Otherwise social services could rule that it is not a discretionary trust and that the assets held within the trust can be counted as his - he would then loose all entitlement to benefit's until those funds are used up. It’s a useful way of protecting a vulnerable person but it’s a legal minefield and needs to be set up with care by a solicitor who has expertise and experience in trust law and the overlap with benefits.
Thanks for your reply. The trust was set up by solicitors recommended by Mencap on their list. I was surprised with the high cost there was a couple of blips by them in the process. It is Notoriously difficult to get dwp to pay housing benefit, hence it will be rent free.
From my experience setting one up still had me involved rather more than I expected eg filling out HMRC forms as it was easier if I did it 🤷♀️ . I now have some knowledge of setting one up but not really how to run one as this was not in the remit. I Will have to engage a chartered trust accountant to help me to do that. Nothing is easy when you have a disabled child and you wish to do your best for his safety and security when you are not around. You just have to keep going.
Whilst the trust may not directly be able to pay bills you may be able to advance your son amounts from the trust at random times to help pay for these things. That's one for a solicitor. Or could the trust generate an income from investments to pay to him towards bills? The latter the council will treat as income for assessments.
Hi Nick, my son can’t receive cash from the trust as this is seen as income. It seems my best option is to engage a chartered accountant to deal with tax forms yearly and the 10 yearly one. I think he is responsible for his own bills from his benefits. I just wondered if anyone else had been in this position to confirm my thoughts.
You could ask your solicitor if random advancements of capital are allowed, i.e. not income. Income is usually considered some sort of regular payment.If there are other beneficiaries of the discretionary trust that are trustworthy then perhaps money can be advanced to them and they could pay some bills directly?
If its a disabled person's trust (I imagine that's what mencap often suggest) there is no 10 Yr charge.
Mencap solicitors recommend discretionary trusts because of their flexibility. Once trust exceeds threshold currently £365 then you would put it into disabled trust. You are advised never to give money direct.
Thank you for your input but it is a complicated matter.
No probs. We have setup a disabled person's trust to hold a house and some investments and another discretionary trust, there's multiple siblings so they can assist with receiving advancements. So we are likely going to use some of the methods I mentioned to assist with bills etc.You'd probably be fine giving a sum for a birthday or Xmas for example.
The diabled person can not claim HB if the property is in a trust and they are the principal beneficiary
Good evening,
If the trust is purchasing a property, the trustees are completely responsibility for the property. They will need to decide how the property will be paid for, maintained and looked after. If someone will be living in the property, the trustees will be responsible for how that person will live in that property.
I would advise speaking and discussing with the solicitor you set the trust up with, how this can be done and perhaps the clauses you will need to include to reflect this?
Mencap also have a very useful guide called 'Guide to being a trustee' which covers in detail, the exact responsibilities of trustees. The guides can be downloaded for free via mencap.org.uk/willsandtrusts
Thanks
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