disabled persons trust fund

[starlitnight]

I wonder if anyone has experience of setting up a trust fund for someone registered disabled. My mum was due to set up a trust fund for my sister who is registered disabled (long term severe M.E., so physical not mental). Mum passed away 2 days before she could do this but apparently us 3 children can still do this if we do a deed of variation on the will. However we are cautious because we have warned it can be complicated and not always the best option. My sister could also just take her inheritance and lose her PIP benefit, which would only go on for another 7 years till she retires. Alternately I could be given her share and pay for things for her, though this also has drawbacks, especially if I were to die! We have spoken with a solicitor who basically said it's our choice. I would love to hear if anyone has personal experience of this. Thank you very much, any thoughts really appreciated

Pip isn't means tested. But it xould intact other benefits. Which she wouldn't need because she would have the money to live on.

I think You can still get pip when you reach regirment age, but you have to have claimed it before. My dad is 67 and gets pip, I am almost 100% certain it's pip.

Is there a reason she can't just have her share of the money if, she is mentally competent?

But it xould intact other benefits.

Sorry that should read 'but it could impact other benefits'

Thank you for the reply, I got muddled over the benefits. It must be ESA that she would lose. Yes we have considered whether she can manage on the inheritance. But she does have expensive medication and treatments.
Appreciate your thoughts!

Unfortunately, varying a will to divert your sister's gift to a trust will almost certainly be classed as deprivation of capital and she will be treated as though she has the money. You need to talk to a solicitor who understands benefits and it sounds as though this one does not!! Capital and other assets only affect means-tested benefits, so income-related ESA, UC, Housing Benefit, Council Tax Reduction, etc. If she ends up with more than £6,000 these benefits would reduce on a sliding scale, and at £16,000 these benefits will stop. I don't think there's anything you can do about it.

I inherited some money a few years ago that stopped my means-tested benefits; in my case I would also have qualified to be the beneficiary of a disabled person's trust, but the death was not expected and the money came to me directly in the will. I couldn't change it and I don't think you will be able to either. It felt like a blow in a way because the money just replaced my lost benefits and so I didn't feel any effect from receiving it. I just had to use it to pay the rent and council tax which had previously been fully covered, and supplement my remaining benefits income (PIP and conts-based ESA) as needed, but that's fair enough really. My capital is back below the upper threshold now and the benefits I lost have been reinstated with a small deduction. Luckily I could stay on legacy benefits because I live in supported accommodation and so can't claim UC for rent, but I would have lost out had I been forced on to UC when reclaiming the means-tested benefits.

Definitely see a solicitor.

One thought is your sister living independently in rented accommodation. If so and the inheritance is sufficient to buy her a home this may be permitted.

Thank you all for your thoughts, that is very helpful. Flourella, I really appreciate your own experience. Thanks for taking the time to share it and sorry for not replying sooner. Yes I think you are right, we do have a solicitor but maybe he is not so familiar with benefits. He seems confident we can do a deed of variation to protect means tested benefits. Like you it doesn't seem fair to lose them because of a gift that will soon run out. However from your experience and from my little research on-line it seems that DWP would see it as asset deprivation. Was that the legal advice you received? Even having the threat of that happening hanging over us I think would be too stressful when already coping with illness and disability. Wishing you well and much thanks

There are little known loopholes in some of the benefit laws, perhaps the ME association could point you in the right directiom for advice?

It will be deprivation of assets unless it’s used to buy a home for her to live in. If she doesn’t already get PIP she should apply ASAP so it’s in place when she reaches retirement age (if she qualifies). I know claimants find it a scary prospect to lose their benefits but I’m sure she (and you) realise that it’s not right to seek to game the system. If she has enough money such that her entitlement to means tested benefits is lost then she needs to live off that money until such time as she needs to claim benefits again

Hi starlitnight. I didn't get any legal advice at the time, just did a lot of research online. There are a lot of posts that pose this question on all kinds of forums: ones dealing with disability, benefits, general finance, law. There's even a forum dedicated solely to trusts. All posts got the same answer, whether it be from a benefits advisor, DWP employee/former employee, or lawyer. The DWP (quite reasonably, I do have to admit) see it as the benefits claimant making a gift to the trust and thus depriving themselves of the capital. When you think about it, to change the will you would all, including your disabled sister, have to acknowledge it as it currently is. So she will be seen as still having chosen to give her gift away. Sorry.

To add: I might not have pursued it anyway. Partly for moral reasons, and partly because the other beneficiaries in my case included members of my extended family from whom I'd been estranged since I was a child, and two charities. So getting all beneficiaries to agree might not even have been possible.

It might be worth speaking to a lawyer specialising in benefits law if it's just you and your siblings involved. Just in case there's a (miniscule) chance that the DWP could make a different decision in your sister's case. There's one at my local CAB (who is excellent!) so there may be one at yours as well.

Thank you flourella. Yes I understand your reasons for not pursuing it. It doesn't feel quite right, although it would basically just pay for anti-viral medication not available on the NHS. Although we have now got a solicitor who says it's totally reasonable and above board I suspect he doesn't often deal with benefit law. My sister and I would hate the stress of worrying we might be doing something wrong and getting a letter challenging the trust from the DWP. We have enough stress with illness and caring duties as it is!
What is a bit comforting is that a discretionary trust is quite complext to manage and we would avoid all that difficulty too.
Thanks again :)