Inheritance for child when the parent is on benefits

[moneyisnotfunny]

Nc and some details changed for this. My young daughter is going to inherit around £30K from her late father once the estate is sorted out through probate. I am a single parent carer on benefits and am concerned about how to handle this situation. The money will be very much my daughter's and I have been told that it is to cover her maintenance up to when she reaches adulthood. Because it is maintenance, there needs to be a way of releasing the maintenance amount per month to me for her every day living expenses. If the full amount went into my account then my benefits would stop and the money would run out long before Dd hits 18 and we would because off as a family. I hope that makes sense.
How can I keep her money safe and in her name but released monthly to help for her day to day things? Is this possible? It's around £300 a month that she got and this is the rate it would continue at afaik. I will be asking for it to be paid into an account in her name. Multiple Junior ISAs? Premium Bonds? She is 8 and any account will have to be overseen by me as her only parent/guardian.
TIA.

The CPAG benefits handbook tells me that the income of a dependent child does not affect the parent's means-tested benefits. (p.390 of the 2024/25 edition.)

I'd still suggest that it goes into an account in her name, just to avoid any potentially awkward questions though.

Thank you. As soon as the death certificate arrives I'll get the claim forms sent off.

I've asked UC via my journal and no response. I tried phoning them and they were most unhelpful and told me I'd need to wait for someone to answer online 🙄
I've chased up the death certificate and they take up to 15 days to even produce it let alone post it.
I'm not renowned for my patience and this is frustrating.

The death in service payment lump sum will go to the ex wife unless one of the dc put in a claim and/or she doesn't want it. It's about £200K. A lot of money for most people. How do I try and get that lump sum redirected to the 3dc? They've been divorced well over a decade and I don't see how aged have a claim over the 3dc?

The person who gets the death in service lump sum will be stipulated by the rules of that particular pension scheme. The trustees may have some discretion, but again, that would be stipulated in the rules. You will need to get clear on what the rules actually say, and then make an argument based on that.The alternative is to get a copy of the rules and then get a solicitor to make a case for you. Without sight of the rules, none of us can really help.

If it was me I'd start by talking to the trustees. They should be able to tell you at the very least whether your ex nominated someone to receive the benefit, or whether it's going to his ex by default. I'm thinking that if it's by default, they may well have more scope for discretion than if they had specific instructions to follow, but that's just a guess.

His ex was named but he named her while still married and didn't update on divorce.

You contact the pension administrator and explain the situation. As I mentioned above, trustees are the ones who decide where the benefits go and they take wishes as a guide. We all recognise as trustees that people forget to update these and most trustees will go with the reality of the situation ie divorced a long time ago and dependent child.
But speak with the pension administrators and find the person responsible for doing the benefit distribution recommendations. This won't be the call centre but usually a senior administrator

I'll call them again tomorrow and ask for that person, thank you.

The pension provider has said I can apply for the lump sum myself on my DD's behalf. That was the advice when I spoke to them. I think this might be the only way to put DD's interests forward to them at the moment. Obviously the lump sum should be split equally between all the dc and that's what I want to happen. I can't see them awarding it all to Dd when there's two other dc. I am also not an administrator or a nominee.

Ah right yes, so you need to make the application then as they have advised. What they'll do is consider all the applications and the wishes and then decide.
Don't worry about the other DC, just make the application.

They've basically told you they can't consider how to alter the wishes until they have the application from you re DD

Thanks again. Do you have any advice for what to write in the covering letter for both applications please?

Just state the facts. That DD is his daughter (include birth cert) and that you were in receipt of maintenance for her care and that you require this to provide for her.
You can outline what else you know eg the date of divorce with ex and any other facts are pertinent eg other DC he had and their ages
They don't need any further information really beyond the fact that he was her DF and that she is a minor and is dependent on this money.

Thank you. I've drafted it now and am hoping that they will award Dd the dependents pension. If she gets a lump sum she'd be set up for adulthood nicely. I have stated that I believe all 3 dc should get an equal share of the death benefit lump sum. At least now they know about Dd and I hope they will take her into account when deciding on everything.

If she does get a lump sum, what do I do with it? Invest some? Just put it into isas? Premium bonds? All in her name of course. Can it ever be used for anything before she's 18? Would I be her trustee or is it someone else? I'm thinking a once in a life time holiday as the most outlandish or driving lessons or car when 17 kind of thing.

Aside from saving it wisely and not putting it into the type of investments that could lose money, what to spend it on when she's older would be her choice entirely

@moneyisnotfunny one thing you may want to consider is making sure your DD learns about savings and investments. This should be age appropriate and ongoing.

Martin Lewis has a good book for secondary school age https://www.moneysavingexpert.com/family/financial-education/

I know this maybe too old for her at the moment but it’s about starting the discussions.

I wasn't planning on telling her about the money, if she gets any, until she's older but when the time is right I will certainly be exploring things with her. She'd want to spend it all now if she knew about it and probably wouldn't understand that it's got to be held until she's 18.
The monthly pension is possibly a different thing but I can't see that she needs to know about it if it's used for her living expenses. It depends how much it is of course.

@moneyisnotfunny You misunderstand, I am not saying tell her about the money now what I am saying is teach/talk to her about money and investments. Two completely different things.

Learning how to save up, budget etc. are key tools for life.

I might mentally spend it as an exercise in amusing myself in quiet moments. Ex's death has hit me hard and seeing the death certificate was upsetting. Thinking about dd might spend it on when she's older brings a little joy to take away the sadness.

I've sent off the forms and everything they have asked for and now it's a case of waiting. Thank you to everyone for your help, it is much appreciated.

In your original post you state you are a carer, is it for your daughter?

The reason I ask is that you may wish to ensure the trust any money she is entitled to is paid into isnt wound up when she is 18 - if possible in any event extending it until she is 21 may be no bad thing

@JohnofWessex no, my Dd isn't who I'm carer for.

How do I put money in trust for her?

I'm afraid that you would need professional advice to set up a trust

Oh dear, that sounds costly. Can I just put her money in junior ISAs? Does it have to go into a trust?

Is the junior ISA max 9k per year? I would advise proper financial advice