A colleague has a client in his 30s. Only income is Industrial Injuries Disablement Benefit. Gets Housing and Council Tax Benefit.

He has been awarded £20,000 PIC. He wants to put it in a Trust Fund a.s.a.p. so he is not tempted to spend it. The possible complication is that he will be one of the Trustees (along with his father who is not well enough to do it on his own).

Will the fact that he will be a Trustee of his own Trust Fund (meaning he will have access to it himself presumably) mean that it will no longer be ignored as capital?

I didn't realise that such an arrangement could be set up but apparently it has been checked by solicitors.

My only thoughts on this issue are that as the Trustee of the Fund your client will not be allowed to have use of the asset, only the responsibility of looking after it. However, if the Trust Fund is a non-discretionary trust, as the adult beneficiary he will have the right to obtain the asset at any time from the Trustee - so he would be asking himself for the money. How would this work in practice?
If the trust is discretionary he cannot insist on receiving payments from the Trust, but still payments from the trust are at the discretion of the Trustees, of which he will be one! I think very much would depend on the nature of the trust.

I have a question - I have a client who has been awarded compensation - and a colleague who believes that recent rule changes and/or case law means that we can release the money without setting up a trust fund but still preserving client's entitlement to IS? Has anyone heard of this?

The Regs. were amended from October, see Rightsnet news for 11/9/06.

Here's a link to the 11 September 2006 rightsnet news story that jim has highlighted -

New miscellaneous amendment regulations:In force from October 2006


The news story highlights the issuing of the Social Security (Miscellaneous Amendments) (No. 4) Regulations 2006 (SI.No.2378/2006).

SI.No.2378/2006 is available here.

Thank you very much.

As regards HB/CTB, the regs seem to allow total and indefinite disregard of capital in a trust fund whose funds are derived from personal injury compensation (HB Regs 2006, Sch.6 para 14). Any income from such a trust fund should also be disregarded.

My concern was that if he was a Trustee and could access the money as and when he chose then this disregard might be invalidated. There doesn't seem to be any distinction in the regs between different types of personal injury trust funds (there are for other types of trust funds). He might have had problems with such an arrangement if the trust fund was not one derived from personal injury compensation.

In the event he doesn't have free access to the fund as the other trustee needs to agree to any withdrawals.