Setting up a trust fund
Discussion
Do I need a solicitor or an accountant?
Back story - mum died recently, there’s myself and 2 sisters that are the beneficiaries of her estate. One of my sisters is mentally handicapped and in receipt of benefits. The house is being changed into our 3 names. There’s cash of about £17k each, if we transfer the cash into my sister’s account it will put her significantly above the maximum savings allowed which means she’d lose her benefits until it’s spent.
We’ve been advised to put it in a trust fund which the 2 of us will be responsible for.
The solicitor dealing with the will doesn’t do it and isn’t sure who does, nobody we know has ever had to do similar.
Back story - mum died recently, there’s myself and 2 sisters that are the beneficiaries of her estate. One of my sisters is mentally handicapped and in receipt of benefits. The house is being changed into our 3 names. There’s cash of about £17k each, if we transfer the cash into my sister’s account it will put her significantly above the maximum savings allowed which means she’d lose her benefits until it’s spent.
We’ve been advised to put it in a trust fund which the 2 of us will be responsible for.
The solicitor dealing with the will doesn’t do it and isn’t sure who does, nobody we know has ever had to do similar.
I am not familiar with means testing of benefits but I suspect that a house in her name will be relevant.
I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
ooo000ooo said:
................ in receipt of benefits. The house is being changed into our 3 names. There s cash of about £17k each....................
Which benefits specifically? Some are means tested and some (for example PIP, DLA, or new-style ESA) aren't. As I see it (and I am far from an expert) she will lose the means-tested benefits (if she's on any, which I think seems fair in this case), and also attempts to circumvent this such as spending it quickly, transferring it to a family member, etc are not allowed - well they are not forbidden but the effect will be the benefits will be assessed as if the money was still there. Also, the capital in the house (since its not the primary residence) will count towards the savings.Jeremy-75qq8 said:
I am not familiar with means testing of benefits but I suspect that a house in her name will be relevant.
I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
Mum died just after easter this year.I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
paul_c123 said:
Which benefits specifically? Some are means tested and some (for example PIP, DLA, or new-style ESA) aren't. As I see it (and I am far from an expert) she will lose the means-tested benefits (if she's on any, which I think seems fair in this case), and also attempts to circumvent this such as spending it quickly, transferring it to a family member, etc are not allowed - well they are not forbidden but the effect will be the benefits will be assessed as if the money was still there. Also, the capital in the house (since its not the primary residence) will count towards the savings.
She's on PIP.ooo000ooo said:
Jeremy-75qq8 said:
I am not familiar with means testing of benefits but I suspect that a house in her name will be relevant.
I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
Mum died just after easter this year.I would say a solicitor.
Assuming she died less than 2 years ago a deed of variation maybe appropriate as the money then never touches her.
The issue of doing this on a deed of variation is it then becomes a settlor interested trust ( she gave it to herself ) which introduces other tax issues.
I feel I also ought to point out that means testing is means testing and if she has had an inheritance taking her above those thresholds then she should not be claiming. Others may have a different view.
alscar said:
The DOV would come from one of you ( ie your sister ) if that was the route you were thinking of taking.
Quick google suggests this might not be a path we should go down? - Impact on State Benefits: If an original beneficiary receives means-tested benefits, redirecting their inheritance through a deed of variation may still be viewed as a "deprivation of capital" by state authorities. This can jeopardise their benefit eligibility
Vulnerable Beneficiaries & Minors: If the variation affects the inheritance of a minor (under 18) or someone who lacks mental capacity, it cannot be signed without formal court approval. This process can cause significant delays and added legal expenses
ATG said:
The solicitor dealing with probate can't even recommend another solicitor who deals with trusts?? That's rather strange.
To be fair, we didn't ask them for a recommendation, they suggested a financial adviser might be able to advise hence me asking here which is best to talk to. ooo000ooo said:
alscar said:
The DOV would come from one of you ( ie your sister ) if that was the route you were thinking of taking.
Quick google suggests this might not be a path we should go down? - Impact on State Benefits: If an original beneficiary receives means-tested benefits, redirecting their inheritance through a deed of variation may still be viewed as a "deprivation of capital" by state authorities. This can jeopardise their benefit eligibility
Vulnerable Beneficiaries & Minors: If the variation affects the inheritance of a minor (under 18) or someone who lacks mental capacity, it cannot be signed without formal court approval. This process can cause significant delays and added legal expenses
Its the same with setting up a trust as you originally suggested ( who actually suggested this ?) given the potential deprivation of capital ( and indeed shared house ownership ), much like when individuals do something similar to avoid care home costs coming from their parents coffers.
simon_harris said:
Isn't the point of benefits that they are for those without funds themselves?
Well she now has funds so it is not appropriate for her to receive those means tested benefits until those funds run out.
I may be that this is what happens but, like paying taxes, if there's a legal way to minimise any dilution of the money, we'll look into it.Well she now has funds so it is not appropriate for her to receive those means tested benefits until those funds run out.
My mums trusts were set up through her financial advisor.
When new laws came in a few years ago I had to register them for her with the tax man, and when cashing them in after her death I had to provide the certificate of registration which wasn't easy to navigate their website to find.
For anyone setting up a trust, and registering them (as the law now requires) I advise obtaining the certificate of registration and keeping it safe for when needed in the future.
When new laws came in a few years ago I had to register them for her with the tax man, and when cashing them in after her death I had to provide the certificate of registration which wasn't easy to navigate their website to find.
For anyone setting up a trust, and registering them (as the law now requires) I advise obtaining the certificate of registration and keeping it safe for when needed in the future.
ooo000ooo said:
I may be that this is what happens but, like paying taxes, if there's a legal way to minimise any dilution of the money, we'll look into it.
Not an expert, but I suspect you've missed the boat on this. AIUI Your mum could have set up a trust, and left sister's share to that trust. But deed of variation on the will now won't work as mentioned above.alscar said:
Indeed and you" shouldn't "but I was simply replying to the suggestion of a DOV.
Its the same with setting up a trust as you originally suggested ( who actually suggested this ?) given the potential deprivation of capital ( and indeed shared house ownership ), much like when individuals do something similar to avoid care home costs coming from their parents coffers.
It's actually in my mum's will that the trust fund should be set up, presumably based on the solicitors advice at the time of writing (25+ years ago).Its the same with setting up a trust as you originally suggested ( who actually suggested this ?) given the potential deprivation of capital ( and indeed shared house ownership ), much like when individuals do something similar to avoid care home costs coming from their parents coffers.
On a sidenote, the trust is also something recommended by social workers to parents of special needs kids but none of them actually know anything about the mechanics of setting one up.
Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff