Reply To: Trust Funds


I had a very similar case where we had declined HB under Reg 9(1)(e) which went to tribunal recently. The trust in that case was a discretionary trust (as I suspect is the case here) which meant that the beneficiary had no absolute right to the trust property – the family home which he had lived in rent free for 11 years prior to the HB claim.

I would imagine that you will find here, as in our case, that the legal title of the property is held by the trustees.

I’m not sure that I agree with Julian’s analysis about her ‘owning’ the property as she would if she was given £50 per week. If the trust holds the legal title to the property then it is still subject to the trust and if it is a discretionary trust she will not be able to do what she pleases with it. In contrast if the trust gave her £50 per week she would become the owner in both law and equity, since the legal title in money passes upon delivery, and she would be able to do what she pleases with that £50.

You might need to request a copy of the deed of trust. In the case I was dealing with the trust deed left it open to the trustees to charge rent if need be.

We won the case, because the tribunal agreed with our submission that the rent liability was contrived, although the tribunal did accept that there was a commercial rent liability despite the fact that the trustees were close family of the claimant beneficiary and had stated that they would not take action to evict him.

But reg 9(1)(e) will not apply where it is possible for the claimant to show that the liability was not created to take advantage of the HB scheme.

I’d suggest that you ask the trustees some further questions about the terms of the trust, whether it is open to them to charge rent, whether there are any other beneficiaries of the trust and what would happen to the trust property in the event that the trustees determine that your claimant is not able to manage the property herself. I would also ask whether she is in rent arrears, whether any action has or will be taken to recover any arrears and how they anticipated that she would meet the rent liability when the arrangement was entered into.

Once you’ve got this information I think you will be in a better position to determine whether or not the liability was created to take advantage of the HB scheme.