ESA and Discretionary Trusts- Disregarded capital?

Hi all,

Wondering if anybody can please point me in the right direction with this?

I have a client who is currently in receipt of ESA-C of £109.30 per week. (She also has DLAMRC/DLALRM)
I am trying to ascertain her entitlement to ESA-IR.

My client has learning difficulties and is a beneficiary of a Discretionary Trust. Her late father set this up before he died. If included as capital, the value of the Trust would disqualify my client from ESA-IR.

It is my understanding that the value of a Discretionary Trust is disregarded as capital, but I have been looking for the regulation that confirms this and I cannot see it. Please would anybody be able to confirm the regulation that allows for the value of the Trust to be disregarded?

I’ve had a look in CPAG (sorry no page number, I’ve used the online handbook) which states ‘The Trust asset itself does not normally count as your capital because you cannot demand payment (of either income or capital)[from it].’ and references Gartside v Inland Revenue Commisioners (1968)

I have had a look at the Gartside v IRC and I can see how it demonstrates the point CPAG have made, but I can’t find any ESA regulation that supports this? I would be so grateful for any clarification regarding this.

Thank you so much in advance for your help,
Lauren

If she’s in the SG, ESA-C she can continue this indefinitely, providing she remains in the SG ?

I guess it’s implicit in DMG Ch 29 that “capital isn’t yours until it’s yours [and even then might fall to be disregarded]”, but it’s not actually footnoted to any particular statute:

Discretionary trusts
[...]
29239 If the trustees make a payment it is a voluntary payment. If the payment is
1.made regularly, it is taken in account as income other than earnings (see DMG 28513)
or
2.not made regularly, it is capital. 
If the trust has been set up by a liable relative the DM has to decide if payments from the trust are LRPs. 

Note: Some voluntary payments of capital may be disregarded - see DMG 29729.

I’m not sure if any of this helps, but the basic principle is solid and widely published. E.g.:

https://www.mencap.org.uk/advice-and-support/services-you-can-count/wills-and-trusts-service/setting-trust-frequently-asked
‘Unlike many other trusts, wealth left or accumulated in a fully discretionary trust does not affect the beneficiary’s eligibility for means-tested benefits or entitlements.’

http://www.housingandsupport.org.uk/discretionary-trusts
‘If a person with a learning disability is named as a potential beneficiary of a Discretionary Trust and might therefore receive a payment of income or capital from the Trust, this will not in itself affect his/her entitlement to income support or local authority funding for care.’

depressing thought but - i expect you’ll find that the decision maker doesn’t understand the point and you’ll end up at tribunal (assuming, as has been said, she’s not in support group anyway).  at that point the tribunal should understand the law and you should be fine.

Thank you everybody for your replies.

I don’t think I have explained the situation properly in the first instance sorry.

My client is still in the Support Group and her ESA-C of £109.30 will continue to be paid as it is now.

I was looking to see if she is also entitled to a top-up of ESA-IR on the basis of the SDP and EDP being included in her applicable amount.

we manage discretionary trusts where people with learning disabilities are the beneficiaries (not me personally but colleagues) and (touch wood) we havent had any issues with the value being disregarded in the 3 years or so ive been here.