Vulnerable Persons Trusts

Trusts Discussion
1

I have been approached by the beneficiary of an Estate to create a Vulnerable Persons Trust by Deed of Variation so that the inheritance does not affect their benefits. Has anyone ever come across any issues with doing this (i.e. the Local Authority challenging this)?

Where the VPT is created by Deed of Variation, is it possible to add money to the Trust in the future? For example, can the parents of the Vulnerable Person name the same Trust in their Will for the child’s money to go into on their death or should a new Trust be created via that Will? Or can the parents add to the VPT created by the DOV during their lifetime?

Thank you.

2

Non lawyer here, but wouldn’t that be a deprivation of assets? (Why should the public pay for someone who has received an inheritance that can cover their expenses but deliberately deprives themselves of it)? The testator should have thought about it (assuming the person was vulnerable before they died and whilst the testator had capacity).

On a separate note, I tend to think mixed settlor trusts are not a good idea (bar say H&W putting in equal amounts at the same time). Just messy.

Sara Spencer ATII TEP | Trust Manager

www.trustandestate.co.uk

Sara Spencer Ltd, 8 Kingsway, Harrogate, HG1 5NQ

07952 651881 | 01423 524114

Sara.spencer@trustandestate.co.uk

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2 Likes
3

Thank you Sara for your thoughts.

4

Definitely deprivation and subject to attack.

Simon northcott

5

For tax purposes a DOV redirects the inheritance as if the deceased had left it directly to the trust, however, for benefits and LA care assessments it’s generally treated as the beneficiary receiving the assets and then gifting them away. This can trigger deliberate deprivation rules if a “significant operative purpose” is to preserve eligibility for benefits/avoid care fees.

6

Hi @Kerry1,

I’m an ex-senior manager (head of service/assistant director) in adult social care - not a lawyer.

If the beneficiary is a person who has the care and support needs to be met, we’d look at section 70 Care Act 2014 alongside Annex E of the statutory guidance (see here Care and support statutory guidance - GOV.UK), which covers deprivation of capital and income to avoid or reduce care and support fees (charges). The LGO also produced a guide a few years ago, worth a read (see here DoA - F.pdf). Hope that’s helpful.

7

Thank you to you both for your thoughts. They are most helpful.