Trust Sums (Hansard, 12 July 1983)

§ Dr. Boyson

The following provisions relating to the treatment for supplementary benefit purposes of sums held under a trust are contained in regulation 4 of the Supplementary Benefit (Resources) Regulations:—'(6) A member of the assessment unit shall be treated as possessing the whole or any appropriate share calculated in accordance with paragraph (8) of any resources held under a trust, whether created by virtue of a statutory provision or otherwise, under which the trustees have any express or implied discretion to pay him, or apply for his benefit, any income or capital. (7) A member of the assessment unit shall not be treated as possessing a resource pursuant to paragraph (6) if the trust funds 330W are derived from a payment. whether in pursuance of a court order or otherwise, in consequence of a personal or criminal injury to him, except that if he is the claimant or the partner of the claimant this paragraph shall apply only for the period, not normally exceeding 12 months from the date on which the payment would, but for this paragraph, fall to be taken into account for the purposes of a claim for pension or allowance or a review of a determination pursuant to regulation 4 of the Determination of Questions Regulations, for which, having regard to the intentions of the trustees, it is reasonable that he shall not be treated as so possessing a resource. (8) A member of the assessment unit to whom paragraph 16) applies shall be treated as possessing a resource either in whole or in part having regard to—

(a) the number of beneficiaries under the trust; and
(b) the terms of the trust, either express or implied,

but no resource shall be treated as possessed by virtue of these paragraphs for such period, not exceeding three months from the date on which it would otherwise have been so treated, as is necessary to enable the trustees to make arrangements for payments to be made to that person'.

Regulation 4(7) was intended to apply where payments under the Vaccine Damage Payments Act and similar payments are held on trust. The intention was that such payments should be wholly disregarded where the parent of the injured person is claiming supplementary benefit and disregarded temporarily where the injured person is himself the claimant and there is an intention to use the payment for some major expense such as the purchase of a car or the adaptation of a house for the injured person's benefit. However, a recent decison of a tribunal of social security commissioners has ruled that where a person is absolutely entitled as sole beneficiary to trust funds—as is the case where a vaccine damage payment is held on trust — regulations 4(6), (7) and (8) do not apply. Instead, the market value of the beneficiary's equitable interest in the trust funds falls to be taken into account as an actual capital resource.

My right hon. Friend laid before Parliament on 8 July the draft Supplementary Benefit (Requirements, Resources and Single Payments) Amendment Regulations 1983 which contain a provision designed to secure that the treatment intended under regulation 4(7) of the resources regulations is continued.

In assessing a resident's ability to pay charges for local authority residential accommodation provided under part III of the National Assistance Act 1948, the provision relating to trusts in the former schedule 1 to the Supplementary Benefit Act 1976 still applies: Any sum which is held on a discretionary trust for the benefit of a person may be treated as included in his resources".

Local authorities therefore have discretion in deciding how to treat such trusts when assessing charges. The Department's memorandum of guidance on charging and assessment procedures, which gives guidance on the interpretation and application of the schedule suggests that where a trust deed allows for the release of capital, it would be reasonable to treat its value as part of the person's capital resources to be taken into account in assessing charges for the accommodation. The value of the trust could then be depleted to the level of the amount of capital which is disregarded under the schedule (£1,200) over a period of years. However the guidance is given in non-directive terms; it is for the authorities themselves to decide whether or not to take the value of a trust into account and to consider individual cases in the light of the person's particular needs and circumstances.