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My uncle (T) has been in and out of gainful employment for years, so much so he has had over 20 full-time positions by the age of (almost) 60. Inevitably he's let go, sometimes receiving redundancy and sometimes not. My grandfather (J) has been helping him out over the years, including paying off T's mortgage to reduce his monthly bills right down, amongst other forms of financial support.

T was made redundant a few months ago, and started to receive job seekers allowance (JSA) from the Department of Work and Pensions (DWP). That is until J started to deposit £200 pcm into T's bank account, to keep him going. DWP saw this as "a form of income", and reduced their JSA payments by £200 pcm, after reviewing T's bank statements. J cancelled the regular deposits, and instead offered to pay the bills on an ad-hoc basis. DWP then agreed to increase the JSA back up to the standard amount.

J is in his late 80's, and is concerned that if T is out of employment after he passes, and T receives a monthly payment from a lifetime gift fund which has been set up, should T be out of work again, DWP may again refuse to pay JSA/reduce the payments.

Should J be concerned about this? And if so, is there anything J can do to mitigate the risk of T being worse off whilst receiving funds from a lifetime fund?

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  • What sort of scale of money would be in the lifetime fund? 10s of K, 100s of K? (I assume at least 10s if it would be able to sustain a yearly income of £2.4K) Commented Mar 6 at 17:09
  • I would argue that yes, they would. But you'll probably want to wait for someone more British to answer
    – littleadv
    Commented Mar 6 at 18:12
  • @GS-ApologisetoMonica I think it's in the region of £120-£150k Commented Mar 6 at 20:41

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If T has regular income, or access to a significant lump sum, that will be taken into account for benefits payments.

The workaround is probably to set up a trust fund with trustees who can make discretionary payments of specific bills like J is already doing. But that then creates its own complications with tax and the legal structure.

Given the likely scale of the fund (£120-150k according to your comment), J should get some paid for legal advice now about how to handle this in his will. He should also think about what will happen during the period between his passing and the trust fund getting set up.

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  • Thanks for the answer. I will likely end up as a trustee, so I will suggest to J that he should seek legal advice. Commented Mar 7 at 7:08

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