Disabled Persons Trust

JonnycJonny

Can anyone explain in clear simple terms the advantages of a Disabled Person's Trust ? I cannot get a definitive answer anywhere on the web. Some sites even suggest that there are no longer any advantages to having one.

I am aware that receiving a regular unearned income from a trust would impact all means tested benefits but would ad hoc payments  from the trust to buy things needed by the disabled person affect their means tested benefits such as UC or would it be disregarded for capital / savings purposes ? 

Perhaps there's a good up to date web link someone can provide me that explains everything succinctly for the layman.

Albus_Scope

Hi there @JonnycJonny it seems to be a bit of a problem getting all correct info here, but we have a page dedicated to Disabled Persons trusts here if you wanted to have a read? I'm hoping the community can offer more support too.  

JonnycJonny

Thank you. I hope someone will offer me some clarity or point me in the direction of a web site with all the up to date salient facts. The Scope page isn't detailed enough unfortunately.

JonnycJonny

Digging deeper ( solicitor pages ) - combined with the basics on the Scope page - things have become clearer - now I am much better prepared to discuss this delicate matter with a member of the family. 

Best wishes 

surfygoose

I answered on a different person’s thread today about my mum and dad setting up a disabled persons trust for me. I don’t know how to link to that post so will paste my answers I put in case it helps:

My parents recently did that and set up the trust for me. They went to a solicitor. They asked at the local solicitor for the person who specialises in disabled people trust fund. The solicitor did do a video call with me. He said I didn’t have to talk to him but that he likes it if he gets to meet the person. It wasn’t scary. He only asked me about what things I like doing and what is important to me. I told him I like to always have a phone to stay in touch with my friends and that although some of the furniture and equipment I need is funded, I might like my own money to be spent to get something that looks nicer. He had already asked my parents those things as well, for instance like they’d told him I often think I might like to go on holiday but that it’s usually a waste of money because I get anxious and won’t go, so they told him I might be better having the money spent on day trips. Mum and dad said it was quite simple to set up because there is already a power of attorney in place for me so the people that have the power of attorney for me agreed to be trustees for the trust fund. So it was explained to me that it would work that after mum and dad are gone, if I needed something or wanted something, I should phone one of my trustees and say for example that I need new clothes and they would decide if that’s a wise thing to spend money on, then they would contact the solicitor and he would release the money to buy me what I asked for. I think it cost maybe £1500 or £2000 for my parents to set it up. I can’t remember. I know they said it was easier because they already had a Will in place and powers of attorney set up. Also the meeting they first had with the solicitor, just to learn about it all, he did for free.

I forgot to say, the solicitor did tell my parents that if they hadn’t have had anyone to name as trustees, or if my trustees had to back out or passed away before me, then the solicitors can put trustees in place themselves. It’s just that those trustees would not know the person so well. They would still do their best to act in the person’s best interests though. It’s just if you do have people you know and trust to be trustees then they know best what things you might want or need. Either way, the main solicitor keeps an eye to check that everything is being done properly. The solicitor mum and dad spoke to told them that he went in person and checked at a care home where someone had asked to buy a new chair for his bedroom, and he found that it had been put in the communal area and everyone was sitting in it. The solicitor told the home that was misuse of the trust money and the chair got moved in to the person’s room like they had wanted, so it does sound like good protection having the trust fund.

MW123

JonnycJonny said:

Can anyone explain in clear simple terms the advantages of a Disabled Person's Trust ? I cannot get a definitive answer anywhere on the web. Some sites even suggest that there are no longer any advantages to having one.

I am aware that receiving a regular unearned income from a trust would impact all means tested benefits but would ad hoc payments  from the trust to buy things needed by the disabled person affect their means tested benefits such as UC or would it be disregarded for capital / savings purposes ? 

Perhaps there's a good up to date web link someone can provide me that explains everything succinctly for the layman.

@JonnycJonny

While a Disabled Person's Trust can provide significant benefits, it is crucial to set it up correctly to avoid potential issues. Improperly structured trusts may not offer the intended protections or may lead to complications with means-tested benefits, taxation, or legal matters. I have outlined some of the benefits of DPT below.

Unearned income from a trust can impact means-tested benefits such as Universal Credit. However, a properly structured Disabled Person's Trust can help protect the beneficiary's benefits by ensuring that funds are not counted as income or capital.

A trust can provide flexibility in how funds are managed and distributed. Trustees can use funds to pay for goods and services that the beneficiary needs without affecting their benefits. This can include ad hoc payments for items such as specialist equipment or home adaptations.

A trust can offer legal protection for the beneficiary's assets. This is particularly important for a disabled person who may need someone else to manage their financial affairs.

 Depending on how the trust is set up, there may be tax advantages. For example, if the trust is set up to pay for the beneficiary's care, it may be possible to claim tax relief on the payments made from the trust.

 A trust can ensure that funds are available for the beneficiary's future needs, including any unexpected expenses or changes in circumstances.

It is essential to exercise caution and seek legal advice that is tailored to your specific circumstances. Relying on general information from websites or advice from non-experts may not provide you with the necessary guidance to ensure compliance with the law and protect your interests. A solicitor or financial advisor with expertise in trust law and benefits can help you make informed decisions and create a trust that meets your needs.

JonnycJonny

Thank you both for your input - very much appreciated.  I will think about it all very carefully and weigh up the pros and cons before taking steps.

Best wishes 

PennyP

How can trustees 'use funds to pay for goods and services that the beneficiary needs without affecting their benefits' to quote @MW123 above? I am a trustee for my disabled sister's disability trust (set up by my late parents) and it seems the only way to get money out is to pay it to her, which then affects her benefits. Is there another way? What do you have in mind when you say that you can use funds to buy goods and services without affecting benefits? Thank you.

Penny

MW123

@PennyP

As the trustee for your sister's trust, you can use trust funds to purchase goods or services directly without impacting her benefits. Always consult the trust document for guidance on permissible uses. It's essential to keep detailed records of all expenditures, including receipts and invoices, to ensure proper use of the funds.

Staying informed about benefit rules and trust laws is important for compliance. While the trust can pay for items directly, thorough documentation is vital for transparency. Consider how each expense relates to your sister’s needs and the trust’s purpose. If you're unsure about any expense, seeking professional advice can be helpful. Understanding the trust document is key, and if your sister is able, discussing her needs with her can help make informed decisions about using the funds.