FINANCIAL & LEGAL
Can the Court of Protection SAVE MY MEANS TESTED BENEFITS AFTER I INHERIT? LMS, a 21-year-old with Sotos Syndrome and significant autism lacked the capacity to manage her own finances. LMS’s grandfather died in January 2018. His Will left 30% of his estate to LMS when she reached 25 (approximately £170,000).
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oncerned about her benefits, LMS’s mother applied to the Court of Protection to allow the money to be placed into a disabled person’s trust. The Official Solicitor was concerned that putting the money into trust would not protect LMS’s means tested provision because it would be treated as a deprivation of capital. Under those rules, if somebody gives something away, including into trust, with the aim of preserving means tested provisions, they can be treated as still owning it. The Court looked at the case law around deprivation. The preservation of means testing did not have to be the sole purpose for deprivation to apply. The arguments from the mother were based on there
There is no guarantee of how the Department for Work and Pensions and the local authority will treat the transfer into trust. being other reasons for the setting up of the trust, LMS not understanding the capital rules therefore not being able to try to get round them, and that this would not be an act by LMS herself. The Court looked at a Northern Irish decision in the matter of ‘McCullogh’ where a variation to Will Trust was allowed to protect means tested benefits. In that case, which is not binding in England and Wales, the Court felt that the significant operative purpose was to give a better effect to McCullogh’s intention that her son should benefit from his inheritance. The Court did not believe that amounted to deprivation.
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The Court authorised the transfer into trust. The Judge made it clear that the Court of Protection did not have jurisdiction to determine whether LMS would be entitled to means tested benefits and funding but can record the Court’s intention in authorising the deed. It is very important to remember that this is a decision made by the Court of Protection in LMS’s best interests and not one that is binding on any benefits authorities. The Court took the view that it would be in LMS’s best interests for the inheritance she had received from her grandfather to be placed into trust as they believed it gave a chance of her Employment and Support Allowance and care funding being preserved. There is no guarantee of how the Department for Work and Pensions and the local authority will treat the transfer into trust. The Court revisited the choice between trust and deputyship. Of course, a deputyship would not have protected LMS’s means tested benefits, so the only option was a trust. Unlike when a deputy looks after money somebody has received as a result of an injury. Those assets being looked after by a deputy would be disregarded for means testing purposes. As always in these situations, it is far better to set up an appropriate trust in your Will if any of your beneficiaries might be receiving means tested provision. ■
Tel: 0114 267 5621 or Email: jane.netting@wrigleys.co.uk sevenstarmedia.co.uk
