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Notional Capital and Trust Fund

DM128
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Asking for a Colleague-

Our clients Housing Benefit has been stopped as the Council consider him to have intentionally deprived himself of capital and as a result, have found him to have Notional Capital instead.

He made his claim for Housing Benefit in 2013. In 2017, he was awarded compensation under the Armed Forces Compensation Scheme due to injures sustained whilst serving in the Armed Forces. This money was placed directly into a trust fund in 2017, and he told the Council immediately to ensure this did not impact his Housing Benefit claim. He continued to receive HB

This year he gifted the whole sum of his compensation to his mother to help her with the purchase of her property. He has now had his HB stopped due to Notional Capital.

Is this worth appealing?

Helen Rogers
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Definitely worth appealing - how can he or she have deprived themselves of capital in order to be entitled to benefit if the capital didn’t affect the entitlement in the first place?
(I haven’t looked up the ins and outs of whether the trust fund should have affected entitlement.)

Paul_Treloar_AgeUK
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Notional capital
49.—(1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to housing benefit or increasing the amount of that benefit except to the extent that that capital is reduced in accordance with regulation 50 (diminishing notional capital rule).

reg.49 HB Regs

As Helen says, if the capital asset it disregarded for purposes of current HB entitlement, how can he be held to have deprived himself of it to secure or increase his HB entitlement? It makes no difference at all to his entitlement which should remain exactly the same. Reg.49(2) is also clear that PI trust finds aren’t caught by these rules so difficult to understand the decision here.

Elliot Kent
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Sorry, I am having some difficulty following this.

If the money was to be held in a trust (which I assume is what is meant by having ‘placed it in a trust fund’), then it would have been controlled by the trustees. It would not have been open to him to just gift the funds to his mother because the money would not have been in his control. That tends to suggest that they were not held on trust in the first place.

Are you able to provide any further detail on what specifically went on with the funds?

DM128
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Thank you all for your feedback.

Elliot-Our client said that his wife and mum were signatories on the trust and so were the ones that signed out the money.

Gareth Morgan
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DM128 - 02 December 2021 08:22 AM

Thank you all for your feedback.

Elliot-Our client said that his wife and mum were signatories on the trust and so were the ones that signed out the money.

So a trustee gave herself money?  Hmm.

Paul_Treloar_AgeUK
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Gareth Morgan - 02 December 2021 09:51 AM
DM128 - 02 December 2021 08:22 AM

Thank you all for your feedback.

Elliot-Our client said that his wife and mum were signatories on the trust and so were the ones that signed out the money.

So a trustee gave herself money?  Hmm.

That could potentially be a bigger problem than the HB eh?

Paul Stockton
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Gareth Morgan - 02 December 2021 09:51 AM
DM128 - 02 December 2021 08:22 AM

Thank you all for your feedback.

Elliot-Our client said that his wife and mum were signatories on the trust and so were the ones that signed out the money.

So a trustee gave herself money?  Hmm.

Perfectly legitimate, if the beneficiary agrees. As the sole beneficiary the client here could direct the trustees to do anything he wants with the money, including paying it to himself, or to anyone else. (Sanders v Vautier, 1841, according to my son’s trusts and equity textbook, since you ask).