Trust Funds and Entitlement to Benefits – Professional Will Drafting Reaps Rewards

Trust Funds and Entitlement to Benefits - Professional Will Drafting Reaps Rewards

Every word a lawyer uses in drafting your Will is there for a reason and a home-made or shop-bought document can never replicate that level of professionalism. In a ground-breaking case on point, the precise wording of a couple’s Wills was instrumental in maintaining their daughter’s entitlement to benefits.

The daughter received payments of up to £750 a month from trust funds established under her deceased parents’ Wills. The Department for Work and Pensions (DWP) took the view that, due to those payments, she was not eligible to receive income-related Employment and Support Allowance (ESA(IR)). The DWP’s refusal to pay her the benefit was upheld by the First-tier Tribunal.

In allowing her appeal against that outcome, however, the Upper Tribunal (UT) noted that the Wills conferred on trustees appointed under them a wide discretion to apply, as they thought fit, income from the trust funds for the benefit of any of the parents’ beneficiaries. The daughter was only one of the pool of beneficiaries and the trustees were thus not obliged to pay her any income at all. If they chose to take that course, there was nothing she could do about it.

Given the clear wording of the Wills, the UT found that the income payments that the daughter received from the funds were voluntary. When assessing her entitlement to ESA(IR), those payments, therefore, stood to be disregarded under the Employment and Support Allowance Regulations 2008 and the Welfare Reform Act 2007. The DWP was directed to make her an appropriate award of ESA(IR) on that basis.

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