Can anyone advise me about discretionary trusts?

[LisaJool]

Obviously I would need to speak to a solicitor but in the mean time I'd like to ask those in know. The situation is:

DD was born with a physical disability and received DLA from birth. I put some of this into her child trust fund thinking it would help her get started. However dd was later diagnosed with an intellectual disability and will not be independent.

The CTF is due to mature early 2023 and has approx £35k (stocks and shares account). Can I put this into a discretionary fund and leave it? My thinking is that if something happens to me my other dc will not be financially penalised in looking after dd. Or maybe a house could be bought down the line for her to live in?

Relevant info:

I'm on means tested benefits as I'm a carer
There is no 'family home', I rent

Obviously the amount isn't massive so I'm wondering if it's worth it from a tax POV? I can't really understand what the tax implications are either.

Any advice welcome, TIA.

Hi OP, there are specific Disability Trusts you can set up. I don’t have experience of them but here is some good info:

www.mencap.org.uk/advice-and-support/wills-and-trusts-service?gclid=CjwKCAjwh4ObBhAzEiwAHzZYU4YOSdkrsWFbZ-MRPTwFKd5cInHeUe3IyisjVr58znw7G5aLwJdRShoCE3oQAvD_BwE

Why not a bare trust with a power of attorney/trustee?

Thanks @TheWurst I looked into the Mencap one but wasn't keen as they have to be a trustee too.
@VanGoghsDog Im not aware of that one, would it have an impact on either me or dd receiving means tested benefits?

@VanGoghsDog - The beneficiary of a Bare Trust automatically has rights to the assets when they turn 18 and the trustees can’t stop them. Depending on the situation with OPs daughter it may not be appropriate. They are normally used as a temporary measure to look after assets until the beneficiaries come of age rather than for long term trust arrangements.

@LisaJool - you don’t need to do it through them it’s just a type of trust. Here is some better info www.litrg.org.uk/tax-guides/disabled-people-and-carers/trusts-disabled-people

Bare trust income would be taxable on your daughter as it arises so yes could affect means tested benefits

I only recommend them OP because they get favourable tax treatment over other sorts of trusts.

Mencap run good free webinars about discretionary trusts -they don't have to be a trustee but do provide good accurate info, I'm a trustee for my sister's trust and found it really helpful in understanding it.

Mum set up one for my older brother who has LD and is on benefits. Me and other DB are the trustees when mum passes. He’s vulnerable and would give it away to anyone that fed him a pack of lies. This way there’s a bit of protection to make his life easier when mum passes.

i used mencaps advice when it was set up.

Thank you all. @Woolandwonder is it difficult to be a trustee in terms of paperwork and admin? Also, if you want to take money out do you know how much this costs? Any examples I can find online are above £325k which has its own tax rules, I can't find any info for smaller amounts.

Unfortunately I can't help as although the trust is set up we don't use it yet (it's really there for any potential inheritance when my parents die) My understanding was that it doesn't cost anything to take money out of the trust for the person you represent so eg. You could take a few hundred pounds out for say a holiday or some equipment they needed.