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I've been made a trustee of a Discretionary Trust fund
I've been made a trustee of a Discretionary Trust fund with several beneficiaries, one of whom is disabled and the primary beneficiary - X. Disabled X currently receives housing benefit, DLA and a state pension and has less than 2k in savings. The trust is intended to pay for luxuries, better care, health, etc at the discretion of the trustees, not day to day things. I am considering making a Vulnerable Person Election to ring fence most of the trust capital and income for use by X as the tax advantages are considerable, but I can't get a clear idea on whether by doing this it could lose the disabled person their Housing Benefit. It seems to depend on whether they have 'access' to the income and capital. By making a Vulnerable Person Election does this mean payments for the ring fenced part becomes no longer discretionary? Or does it remain discretionary but regarded as X's capital? I understand that if I don't make the election and savings remain low that X's housing benefit will continue. Can anyone advise as neither my solicitor nor my accountant can give me a clear answer.
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