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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To ask about money in trusts and benefits?

77 replies

DuckAndPancakes · 19/07/2021 09:55

If my children are left money as inheritance, to be held in trust for a house deposit when they are adults, will it be considered as part of our savings with benefits?

It is looking like DP and I will never own our own home, increasing house prices and "poor choices" just put it completely out of reach. We've both lost grandparents in the last year and lots of talks about inheritance, money, wills etc. Is there a way that we can legally, above board, have money left for the children instead of us, so they get a chance when they are adults to own a home?

If we received lumps of money in savings, it would cancel our benefits and we would essentially have to live off that money, with no way to use it to actually better our lives or buy a home. I'd rather we were skipped and written off, so we can see them prosper.

OP posts:

ChainJane · 19/07/2021 13:37

I agree with others that if the person you would inherit from has already died you cannot pass the money you would receive to your children without losing your benefit entitlement anyway. If you are able to persuade people to write in their will while alive that it should go to your children and not you then that's a different kettle of fish.

Remember though that even if you are able to get the inheritance to pass directly to your children they will have the same issue as you when they start claiming benefits after leaving school so you might just be delaying the inevitable.

Viviennemary · 19/07/2021 13:41

Why dont you accept the money and use it to buy your own home rather than renting for ever.

ivfgottwins · 19/07/2021 13:46

You mention your partner working but not you?

I just hate the idea of life changing amounts of money not being able to better somebody's life

Well It does indirectly as it means less people claiming benefits when they don't need it and more money in the pot to better everyone's life 🤔

TakeYourFinalPosition · 19/07/2021 13:48

*If the Trusts are set up before the person who set it up passes away, or it is stipulated in their will, that's not an issue.

If you are talking about putting money, left to you,in trusts for you children, then no, that would be classed as deprivation of assets.*

This. The gift earlier this year would depend on how much it was.

Did your grandparents leave the money to your parents, and you’re thinking ahead to any inheritance you might get from them, or are you expecting money from them? If the latter; you are already too late - there is no way to pass that money on without it being classed as deprivation of assets.

I’d second the advice that a trust for your kids doesn’t necessarily mean it won’t get spent on rent; too, as it’d stop them from being able to claim benefits when the time comes too.

Sorry if you’ve covered this and I’ve missed it - are you able to work too? If not, is a mortgage where you are possible on just your DHs wage, even if you had a deposit?

Original poster

DuckAndPancakes · 19/07/2021 15:13

My MH has pretty much fucked my working career, to put it bluntly. Wrongly diagnosed and treated through my 20s left me in a manic state often, and I'd burn myself out. I'd literally work myself into a mental health crisis. I've spent the last few years working really hard on treatment, therapy, medication etc but the pandemic had a massive toll on it all, too. I miss working, but I don't want to rush myself into something that could make me ill again.

I no longer have any debt, other than putting one shop on the CC a month and paying it off to help towards my credit rating. I've managed to raise my credit rating from okay to excellent in the last year or so.

Mortgage would be hard even with both of us working, honestly. House prices have skyrocketed, and even with a decent deposit, truing to get a mortgage for nearly a quarter of a million pounds won't be easy. (Run down three bedrooms are going for around 400k or more here now) I want nothing more than to be able to buy our own home, I want the stability and the equity and the future. I just don't see how we will be able to, thus wanting to somehow make sure the kids aren't in the same position.

Gift earlier this year was 10,000. 8,000 went on debt and 2,000 went into savings. I've added to that what I haven't been spending on debts and nearly doubled it.

OP posts:

MarianneUnfaithful · 19/07/2021 16:54

@Viviennemary

Why dont you accept the money and use it to buy your own home rather than renting for ever.

Because they don't currently earn enough to get a mortgage big enough for the house they would need.

And if they save it for the future when they have lower child-rearing costs and maybe higher income, they will have spent it in lieu of the benefits that they would lose by having the money in savings.....

That's the trap.

Singinghollybob · 19/07/2021 16:59

How much inheritance are you talking about? I understand you saying house prices have risen but if you've got a decent deposit and your credit rating is excellent couldn't you work towards getting bacl into work at some point of your MH is improving, and get a mortgage?
You mention your DP will be getting promotions...you're already paying a lot of money in rent, would the mortgage payments on a house be that much more?
I don't really agree that lump sum wouldn't better your life, surely being off benefits is a better way of living??

Jangle33 · 19/07/2021 17:05

I don’t understand why you don’t use the money to pay your rent and other expenses now? Why should the state step in when you have another option?

Original poster

DuckAndPancakes · 19/07/2021 17:09

@Jangle33 because if we had, say, £20k in savings and used that money towards our rent, it would last a few years before we would have to be back on benefits because there wasn't enough, or it had depleted to a level where we would be eligible for them again.

Whereas, if we could offset getting that money until we were in a position to buy a house, we then wouldn't need to claim the benefits again at all. Or at least, that's the hope and theory in an ideal world. Or, our children would never have to fall into the benefits trap, because they'd be able to buy somewhere and get on the property ladder in their 20s.

OP posts:

Soontobe60 · 19/07/2021 17:14

Who actually has this inheritance at the moment? If it’s your mother, she could hold on to it whilst you get a job and continue to save for a deposit, then when the time is right, and you’re no longer on benefits that are affected by savings, she can gift you the money as a part deposit.

Jangle33 · 19/07/2021 17:16

Plenty of people don’t ever get the opportunity to buy a house but aren’t on benefits.

In the meantime whilst you’re using savings (not claiming benefits) you have opportunity to make changes to your life to earn more/reduce outgoings.

If you can’t then the benefits are there for you but hopefully you won’t need them again.

And your kids are presumably at school now and every opportunity to get a good education, good job and live their life without parental house deposit, like most people…

MurielSpriggs · 19/07/2021 17:18

@Jangle33

I don’t understand why you don’t use the money to pay your rent and other expenses now? Why should the state step in when you have another option?

Easier answer: so long as the testator is not dead, because she can!

It's within the rules. The rules are not entirely fair or rational in either direction. But if ministers want money belonging to the kids to be used before benefits can be claimed then they can very easily change the rules.

TheQueef · 19/07/2021 17:18

@Viviennemary

Why dont you accept the money and use it to buy your own home rather than renting for ever.

Unless it's enough to buy outright they can't get a mortgage.

Original poster

DuckAndPancakes · 19/07/2021 17:19

I actually don't know exact amounts either. My DM has given DB around 35k that apparently will be matched for me when I'm in a position to buy, the same as any extra she gives him I'm the mean time. DP has been told he will get "enough for a house deposit" from DGPs, but with varying house prices we really don't know what that means.

Even if our combined income was £45k a year, I'm not sure we'd be able to get a mortgage for 200k+.

So, I suppose, either way we will probably have to resign ourselves to it being unlikely to happen. DP will one day, hopefully far in the future, inherit from his parents and that would leave us "set" but, also in a position to choose whether to take it ourselves our allow the children to use it instead.

OP posts:

Original poster

DuckAndPancakes · 19/07/2021 17:29

@TheQueef
Maybe there's a magical mortgage maiden I'm missing.

OP posts:

Wallpapering · 19/07/2021 17:30

Any savings - moneys your children have are taken into consideration in the savings allowance.

This is a loophole closed to prevent those dumping any savings under kids name, you would be surprised how many used to do this.

Even many years ago my kid nationwide accounts paid really high interest rates than mine so was better to put in there.

Zilla1 · 19/07/2021 17:34

To try and be helpful, if the relatives holding the money have not yet passed and are willing then they might be able to dictate the creation of a trust to which both you and your children can access at a reliable trustee's discretion so you might not have to take the money and hence jeopardise benefits until you are in a position to use it for a deposit and, if that never happens, then you might give your DC the opportunity you want.

If they have passed and you are in England then with a willing executor, you might be surprised for how long some estates can remain undistributed.

Good luck.

gogohm · 19/07/2021 17:35

Why don't you buy a shared ownership property? If the money is left to you in a will your mother needs to hand it over, whilst your grandparent can state for a property I'm not sure it can be ringfenced by your mother holding onto it, it could be classed as deprivation of assets

Wallpapering · 19/07/2021 17:37

Even child benefit had earnings limited put in place and no longer automatically given.

Not sure if they count inheritance savings even if in child’s name as earnings

MarianneUnfaithful · 19/07/2021 18:39

@Jangle33

I don’t understand why you don’t use the money to pay your rent and other expenses now? Why should the state step in when you have another option?

By trying to ring fence the money for a future property buy, the money may eventually make a saving for the state.

The Gvt recognise this with schemes like Help to Buy ISAs etc.

MarianneUnfaithful · 19/07/2021 18:40

It is short term thinking: spend the money in rent, then go back on benefits…

Finknottlesnewt · 19/07/2021 18:40

Hiya - dwp employee here . (33 years mostly in the serious fraud directorate so I hope I am able to advise you!)

First . Try and stay on tax credits as long as you can. No you did t need to declare a lump sum used to pay off debts as this didn't alter you annual income significantly.
Second . If it's a 'significant sum' .. why don't you speak to a broker to see if there is a mortgage at a reasonable rate that may let you buy yourselves. Don't say no chance until you have asked. A good deposit gives you access to better offers..

If that really isn't possible - then how about buying a small property somewhere cheaper and renting it out. Would that replace the in one lost on Tax Credits ?/ UC when it becomes necessary. I have no idea if this is realistic as I don't know if you get £20 a week or £200 nor do I know your rent or. Hildcare costs..

Last but not least BE prepared.. 16k is the CUT OFF .. so more than that and you aren't entitled to UC. A deed of variation would be treated as a deprivation of assets. So be really careful. Inheritance brings out the worst in people and a sizeable % of allegations come from people jealous of other families good fortune.

FWIW I agree with you. It would be awful if that money was just dwindled away.. believe it or not those of us who work in welfare believe in it, want the money going to those who need it and want those in difficult circumstances to be able to pull themselves into the world of self sufficiency.. hope it turns out you can buy something !

Finknottlesnewt · 19/07/2021 18:45

Sorry yes completely agree with PP ! Get it in a help to buy ISA if they are still going and look at shared ownership. You can bung as much as possible into the deposit , and as long as you have less than 16k left still get help towards the rent element. !

MrsFin · 19/07/2021 18:45

Don't you think that, for the rest of us who are effectively paying for your benefits, the right thing to do would be to accept any money left to you and to reduce your need for benefit payments?
To do anything else is immoral art the very least, even if not illegal

Wallpapering · 19/07/2021 18:51

@MrsFin

Don't you think that, for the rest of us who are effectively paying for your benefits, the right thing to do would be to accept any money left to you and to reduce your need for benefit payments? To do anything else is immoral art the very least, even if not illegal

Go on do tell how much your of tax pay others benefits.

Why do people always assume anyone on benefits pays fuckall tax

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