Beneficiary means tested benefits & trustees power to borrow

A wishes to make a Will dividing her estate between four children, one of whom (B) is on means tested benefits. We have discussed the use of life interest and discretionary trusts.

What A would like to do, is use the trust monies for B to purchase a property. There will be about £100k so insufficient funds to do so. STEP provisions are included in the Will so there is a power for the Trustees to borrow (should they be prepared to do so).

I have concerns that mainstream lenders may not be prepared to make a loan to trustees in this situation. Do any forum members have experience of lenders being prepared to grant trustees a mortgage in this type of scenario?

Any alternative views on how to deal?

Justin Wallace
Brewer Harding & Rowe

Unless the lender can be persuaded that the borrower can finance the
on-going mortgage liability (e.g. interest and any capital repayments),
which is likely to include guarantees from the individual trustees,
personally, it is unlikely that borrowing can be obtained.

Do the other children need financial support, or would they be willing
for the child in question to receive the primary benefit during their
lifetime? If so, then the whole estate could be subject to a
discretionary trust (over income only) with all 4 children being
entitled to capital on the winding up of the trust.

The full value of the trust could then be applied for the purchase of
property, with the agreement of the children, and any income could be
shared between those children not occupying the house.

Paul Saunders

I think what the testator wishes to do is not really viable. She will not want the other children to miss out/delay their inheritance so it will be an equal split between the children. If child B receives £100k outright, this will affect her means tested benefits hence the idea of placing this share in a trust. The testator wants this share to be used to buy a property but £100k is simply not enough. If we set up a Trust this puts off potential lenders plus, as you say, Trustees are unlikely to want to provide the additional guarantee. B has little assets in her own right.
Justin Wallace
Brewer Harding & Rowe