Home ownership through a Discretionary Trust

This page has technical information about Discretionary Trusts - a secure way to make financial provision for relatives.

Discretionary Trusts can be used to:

  • Buy a property outright
  • A share in a property
  • Own a family home which is to be passed on to a relative as an alternative to direct inheritance.

People trying to make secure, long-term financial provision for relatives can set up a Discretionary Trust. If there are any significant sums involved this is usually a much better option than simply leaving money or other assets like a property in a will. This is because as soon as someone with a learning disability inherits any significant sum the effect will be to take them out of means tested welfare benefits and the local authority will be relieved of any obligation to fund care.

Historically, Discretionary Trusts have been used by parents or grandparents to put aside a small sum to pay for things that may not otherwise be available but will improve the relativeís quality of life once the relatives are no longer around – a regular holiday, a new coat, presents at Christmas.

Discretionary Trusts are commonly created through a will and become effective on the demise of the 'settlor' as they are termed. However a Trust can be created at any time. The essential purpose of a Trust is to manage assets so it is an ideal vehicle for owning property – an asset.

A Discretionary Trust works because once funds (or an asset like a property) are put into Trust they belong to the Trust, administered by Trustees, and not the individual(s) who is nevertheless intended to benefit. There are many different types of Trust.

To be effective this particular form of Trust must have these characteristics:

  • The Trustees have absolute discretion as to how the funds are used
  • The intended beneficiary has no right to either capital or interest
  • The Trust is established for the benefit of a class of people (an identifiable group) rather than exclusively for a single named beneficiary i.e. all people with autism living in England

How to access

Trusts are in the hands of the relatives. There are usually between two to four Trustees. Once established it is then the Trustees who control access to the funds/ property. It is increasingly likely as disabled people life expectancy increases that more and more people will have a property through a Trust. Three out of four parents of a disabled person are themselves home owners and will have an estate to leave to their heir.

This may be:

  • Through the family property passing to the Trust and the son/daughter continues to live in that property with the necessary care and support or
  • There are several siblings who have to inherit. The family home is sold. The proceeds are insufficient to buy a property outright but can be used to buy a share in another property
  • A Trust is set up now rather than through someoneís will. This may be because there are other friends or relatives who want to give (or leave) something to help a disabled person. They are much better advised to give the money through a Trust rather than directly.

Pros and cons


  • One of only two ways of making long-term financial provision in a way that does not compromise benefits or care funding
  • Trustees can manage and maintain property; solves problem of legal capacity Can be used to purchase property outright or for shared ownership
  • Provides additional protection of funds for the individual from exploitation, change in policy or legislation.


  • Can be difficult to find willing, reliable, suitable Trustees who ideally would be of the same age as the prime beneficiary
  • A Discretionary Trust, by definition, gives Trustees discretion – families may have concern that Trustees may use funds to assist people other than the prime beneficiary or fail to administer to Trust properly
  • Need solicitor with good knowledge of Trusts in context of benefits and social care rather than tax planning. Fees to set up.

How the money works

Living in a property owned by a Trust does not affect benefits for the reasons explained nor does it relieve a local authority of any duty to assess under Fair Access to Care and provide for the assessed needs.Trustees manage the assets for the intended beneficiary.

Note that Discretionary Trusts can provide a solution to organising the purchase and on-going maintenance for someone who lacks legal capacity to contract for these things.
If the property is large enough and suitable in principle other people could share, if this is wanted. The rental income comes to the Trust and does not affect the individualís benefits. This may provide an income to the Trust to repair and maintain the property.

Ideally, if possible put into the Trust additional cash or assets to fund property repairs and maintenance in the future particularly if the individual will be living alone and the Trust will not have any income from shares.

Other issues

For more detail on Discretionary Trusts refer to our guide to Discretionary Trusts. Mencap has a department that advises on Trusts - www.mencap.org.uk

Although Discretionary Trusts are not perfect there are various possible safeguards such as:

  • The settlor setting out their wishes in a letter to Trustees – but is not binding
  • Lodging copy of deed with Adult Social Care or an advocacy agency so there is some awareness that a Trust exists and who Trustees are
  • Have at least one Trustee who is not a family member
  • Look for mix of skills in Trustees.
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Learning Disability England
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Learning Disability England
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