Person aged 46 has never claimed IS and is ICW. They receive regular payments from a discretionary trust (the trust funds in this case are not derived from compensation for personal injury). If these payments were to be disregarded, their capital and income would entitle them to IS.

There is no specific disregard for such payments, but could it be argued that because the payments are made at the absolute discretion of the trustees (the trust deed uses such a phrase and this is also often used in discretionary trust deeds), that these payments are voluntary payments and should thus be disregarded in full under para 15 schedule 9 IS regs. Trustees get nothing in return from the claimant for making the payments and I have had it confirmed that they could stop the payments or increase them if they wanted to.

CPAG book is mute on the subject, Zebedee and Ward at para 13.120 states that these payments count as income (for HB/CTB, but I assume there is identically worded legislation).

Personally, I think that one can make the case that the payments are voluntary payments and should be ignored.

Anyone got any thoughts?

I don't know about any regulations that may apply but I do know that a discretionary trust is just what it says - i.e. the trustees have discretion as to what (if anything) they pay to any beneficiary, and also when they pay it. This has, of course, to be done in accordance with whatever is in the trust deed.

Given the above, I fail to see how the payments can be anything other than voluntary (but I expect someone with more knowledge will think differently).

Trustees have to act resonably in exercising their discretion: they cannot fetter that discretion by deciding not to pay out the basic principle is that they are under an obligation to exercise the discretion, not just stick it in a cupboard and try to forget about it. Indeed. depending on the terms of the trust they may be under an obligation to make payments, even though they retain a discretion as to their choice of beneficiary. Some trusts do require all the income arising in any given year to be spent, though that is unusual.

Certainly there is no saleable interest in a discretionary trust, for any one beneficiary, and it unnecessary for the capital to be disregarded under Sch 10 of the IS regs.

But I cannot see, from the case law, that there is any reason for this not to be a voluntary payemnt. Trusts are unusual anyway in that there is never any obligation imposed on the beneficiaries - they have enforceable rights without giving any consideration.