Reply To: How is a trust account legally categorised?

#163836
nick dearnley
Participant

Trusts are a whole specialist area in themselves, but my understanding is this (althoug I could be wrong):

To be held in trust the money must be held by one person for another and received with specific terms, such as to be kept until another person turned 18.  In this case if it were held by the clmt for her mother, it would be disregarded as long as the trust could be evidenced.  There is no need for a written deed unless the trust holds real property; anything else can be an implied trust or a resulting trust.

You have a payment made to the clmt held in an account in joint names.  I don't think that on it's own makes it a trust, because it is the clmt's money, not her mother's, and was paid to her alone.  How and where she chooses to keep it is up to her, and I don't see how putting it in a joint account affects that.  Are there terms to the account that mean both must sign for withdrawals, for example?  Or can your clmt or her mother go and pull money out of the account at a cashpoint?  Would her mother clear out the £28k without consulting the clmt? 

I would say that if it is held on trust the account name might be something like Mrs Mother for Miss Clmt, but as it's a joint account it is more likely Mrs Mother & Miss Clmt.  If so, they both have joint and several access to all the account funds. 

You could treat half of the money as belonging to each party (reg 51), but I think that would be wrong because you know that all of it belongs to the clmt.

It sounds as though she is relying on it being an implied trust, but for that to work there has to be an agreement between them as to who is the trustee and who is the beneficiary.  I would say it is unlikely that the mother is the beneficiary of money paid to the clmt, becaue that would go against the purpose of the compensation payment.

In an appeal I would concentrate on the fact that it doesn't come under the Sch6 disregards – as it would for a personal injury payment – and must count as capital.