Trusts and possible deprivation

Client works p/t and housing benefit now stopped and over payment raised - in 2009 she was seriously ill with cancer and received a lump sum payment under a critical illness policy, for £55,000, not declared.

She gave £20,000 to non dep son in 2012 to help whim with deposit on house, which can be proved.

She now has £23,000 left, which she wants to put in a proper legal trust for her 17 year old daughter.

Am I right in thinking that, if she does this, this would not count as actual capital, but it would not stop a potential notional capital argument by the LA?
Many thanks!

If she doesn’t physically have (access to) the cash, it’s notional capital. Whether she should be penalised under the deprivation of resources rules depends on whether the SoS deems her to have deprived herself of the capital in order to increase benefit entitlement. Given her history of health problems and her desire to provide for her children in the event of her death or their coming of age, it appears to be reasonable for her to have disposed of the capital as she has anyway.

It’s a question of fact whether she made the decision to deprive herself of capital in order to get benefit or whether she would have done it anyway. Only she will be able to tell you.

Thanks Edmund for your reply.

I am not so optimistic - the worst (and possible) scenario is that she sticks all the money in a trust, the LA say is deprivation and take it into account as notional capital. She could of course appeal but that would take months. She works p/t and earns £700 pm, rent is £400 pm. So she is denied HB and has the capital tied up and cannot access it, cannot pay the rent out of her capital - which may lead to an eviction.

Far better I think for her to finance her daughter’s education at Uni in a years time, as and when needed, and get the capital below £16,000 that way - think she would have a stronger case on possible deprivation and be able to meet her rent in the meantime.