discretionary trust

If a house is purchased through a discretionary trust and your disabled son is allowed to live there rent free and he is one of multiple beneficiaries of the trust, do you tell DWP if they ask if he is a beneficiary of a trust? I am aware that he has no rights to the house or money. I was told that I didn’t have to tell them some years back, does this still stand?

[Chocolate-heals-all]

I was told that one need not mention if someone is one of multiple beneficiaries to a discretionary trust, for the purposes of means-testing. But I reckon this is a question to put to an advisor from Mencap. Also - beyond the scope of your immediate question - I’d suggest that the trustees should probably be charging this person rent, if the person has a low enough income to claim Universal Credit with the housing element, and the rent will cover maintenance expenses. If a person gets Universal Credit, they get a monthly statement of their income being below a certain amount , and they get free prescriptions and free eye tests. Another thing to talk over with a skilled benefits advisor. The two matters are linked, because any DWP investigator is going to ask questions about why a person is not paying rent.

[Mencap-Wills-Trusts Expert in reply to Chocolate-heals-all]

Good afternoon,

Anyone can ask if a person is a beneficiary of a discretionary trust; whether they are, or are not, the fact that they have no absolute right to anything in the trust, means nothing in that trust will count towards their income and therefore it cannot affect their entitlement to means tested benefits. Providing the trust has been set up correctly; there are no more than four trustees and multiple beneficiaries that have a potential right, and the terms of the trust has ben done correctly, DWP have no right to stop benefits.

I would seek additional guidance and support from the solicitor you set the trust up with, i have no doubt they will have guided families through this many times.

Thanks.

[DrSarahmac]

we (very) recently set up a trust through specialist legal firm and were advised that the trust cannot be counted as an asset as it is not owned by the beneficiary. Rent however cannot be charged on the property in order to get housing allowance. I can’t remember the entire logic on that but it was along the lines that the trust cannot charge rent to someone for a benefit they are entitled to use. As others have said I would check with specialist solicitors (STEP) or MENCAP’s trust company. Our advice was received in tge last 6 months.