Discretionary trusts
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starbuck
Online Community Member Posts: 195 Empowering
If a disabled person is a trustee in a discretionary trust will any payments out of the trust affect means tested benefits?
For example, if a person bought a house from the money in the trust would the dwp view this as capital and stop benefits?
I know it's a very complicated area but wondered if anyone else had any experience of having a discretionary trust or being named in one.
For example, if a person bought a house from the money in the trust would the dwp view this as capital and stop benefits?
I know it's a very complicated area but wondered if anyone else had any experience of having a discretionary trust or being named in one.
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Comments
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Hi welcome to the community I dont know the answer yo your query but will tag in someone who may be able to assist . @poppy123456 can you help0
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Hi @starbuck, here is a guide about discretionary trusts for disabled beneficiaries. I hope this is helpful.By incorporating a discretionary trust into your Will, protects the means tested benefits of your disabled child or beneficiary under current rules and overcomes these barriers.
The trust is a formal legal arrangement whereby trustees hold money on behalf of the beneficiaries, in accordance with the terms of your will.0 -
Thankyou ?0
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Hi,Money in a trust is only protected while it's in the trust. When funds are withdrawn it's no longer protected.0
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So you would need to get permission from the dwp to buy a property from a trust?0
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As soon as the money is taken from that trust it will be counted as savings. It's only disregarded if it remains in that trust.
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Ah ok. So purchasing a house would be the same as if the money had been left directly in the will, in that you would need written permission from the dwp that it wouldn't be deprivation of capital?0
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That's correct because once it's released from the trust you will have access to it. If you're claiming for help with rent at the moment then i can't see there being any problems with deprivation of capital but of course i'm not the decision maker and only they can make that decision.
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Thankyou ?0
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You're welcome
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starbuck said:Ah ok. So purchasing a house would be the same as if the money had been left directly in the will, in that you would need written permission from the dwp that it wouldn't be deprivation of capital?
I would say that protecting the money in a Discretionary Trust is good, but it will not earn very much in the way of interest. Converting it into your principal private residence you will gain as property prices increase and none of that increase is subject to any DWP rule and you will not pay tax on it. It's a win win situation.
Anybody that has this situation is well advised to use every penny to buy the best, most expensive house they can find
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Thankyou ?0
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