Means Tested Benefits and Discretionary Trusts.

I have been for the last few years on two means tested benefits ESA and Housing Benefit. (I also get low rate DLA on both sides.)

My 87 year old healthy mother has a few assets. To half future inheritance tax my family wish to transfer a rented property to me and my two working siblings now. My two siblings would rather not sell the property but continue to rent out the property.

A financial advisor recommend that if the capital asset/property was held in a discretionary trust then any means tested benefits would not be affected by this (capital asset worth over £20K). I doubt this.

I would personally need to declare my third of the income (circa £5K) from any trust.

I am sure that my possible share of the capital asset/property even though held in trust would cancel out *totally* and *separately* >>both<< my ESA and my Housing Benefit (which together equal 11K a year) and leave me with at best total income from rent from the property of £5K.…must I be worse off.

I know I need to get legal advice, though looking on the web I certainly don't trust that all lawyers know what they are pretending to be talking about. Real legal advise costs money, which few of us have.


zoe

PS. While trying to find some answers I came across this useful resource from Age UK:
Factsheet 81 May 2014 Calculating income related Employment and Support Allowance
www.ageuk.org.uk/Documents/EN-GB/Factshe...uage=en-GB?dtrk=true

Thanks for the link to the Age UK factsheet, it's pretty comprehensive, I'm impressed.

You've probably thought of this, but have you tried asking Age UK themselves for further advice on this? (At least on the issue of whether a discretionary trust would do what you needed it to - I doubt they would give investment advice any more than CAB would.) They could also say whether this line of action would have any implications for your mother's future eligibility for benefits.

I don't know your age but I think you only have to be over 50 to get help from Age UK.

I have worked with clients, and their solicitors, who are on income related benefits who have a discretionary trust. I can confirm that capital and income held in or generated by a discretionary trust do indeed have to be disregarded by the DWP. Setting up a discretionary trust usually requires a solicitor so I suggest that is where you turn to next.

I have sought advice from about five advice services ...no one seems to know much about Discretionary trusts and Means Tested Benefits . Thus seeking the advice of a solicitor is the next stage. My mum's solicitor is extra expensive due to nice home counties location, and I dont know if they have any clue either.

From my reading it would appear that were these trust get mentioned the Beneficiaries are significantly disabled and if the trust involves property, then the Beneficiary needs to live in it.

www.dls.org.uk/advice/factsheet/general/...de%20to%20Trusts.pdf

www.rethink.org/carers-family-friends/wh...or-the-future/trusts

But all very unclear
Zoe