Sticking head over parapet here (tin helmet taken away due to budget cuts!)
Who was the previous owner and how did the property become the subject of a trust for the child of the claimant and landlord?
Who are the trustees?
Is the child (relative) a dependant child?
This does rather suggest the possibility of an attempt to circumnavigate Reg 9 (1) and could well be “contrived” (said to spare typing “that phrase”). However Reg 9 (1) (f) may cover this. This excludes a liability to a trustee of a trust of which a dependant child is a beneficiary. This could certainly appear to be the case here (if I read your post correctly).
I would suggest that you get the full Land Reg history before making your decision.
No, I don’t think you’re going mad – it’s just another step in the minefield that is benefits!!
Do I know what I'm doing? The jury's out on that........................