Savings put into another person's name

morgwick

Can anyone give me some advice regarding the following:

My Mother In Law is in sheltered housing, and has her rent paid due to low in income.
She inherited some money when her brother died and has put £40k into a high interest bond. She has put this money aside for her 4 children for when she dies, so she has no intention on using it and has stipulated to this effect in her will. She also has £10k in her current account for her own personal use. She has been told by her bank that if she closes the bond to try and withdraw the money she will be charged £7k!

She has been told by the housing authority who reviews her income, that she can transfer the bond into someone elses name so it doesn't get included in her total income when she gets a review to see if she can still have free rent. So she has asked me if I can have it in my name.

Is this allowed?
How will it effect her estate when she dies?
I receive child tax credits, will this affect my claim?
Will the money then be legally mine?
Is there any other way she can treat the money i.e. put it into trust?

I don't know what tax / legal implications are involved so any advice would be appreciated.

Thanks

johncolescarr

morgwick wrote: »

Can anyone give me some advice regarding the following:

My Mother In Law is in sheltered housing, and has her rent paid due to low in income.
She inherited some money when her brother died and has put £40k into a high interest bond. She has put this money aside for her 4 children for when she dies, so she has no intention on using it and has stipulated to this effect in her will. She also has £10k in her current account for her own personal use. She has been told by her bank that if she closes the bond to try and withdraw the money she will be charged £7k!

She has been told by the housing authority who reviews her income, that she can transfer the bond into someone elses name so it doesn't get included in her total income when she gets a review to see if she can still have free rent. So she has asked me if I can have it in my name.

Is this allowed?
How will it effect her estate when she dies?
I receive child tax credits, will this affect my claim?
Will the money then be legally mine?
Is there any other way she can treat the money i.e. put it into trust?

I don't know what tax / legal implications are involved so any advice would be appreciated.

Thanks

I'm not qualified to answer this question, you may even wish to get professional advice if you don't get the answers you are looking for here. I have heard that in order to avoid inheritance tax you need to transfer any assets 7 years before the person passes away, sorry for the macabre note but these things are important.

As for the bond it sounds like a fixed term one with penalties for ending early, hence the huge loss for doing so. Sounds like this is a complicated case and warrants expert attention

apt

Inheritance tax is unlikely to be an issue as the threshold is £312,000. However there are strict limits about what people receiving benefits can give away and you are not allowed to transfer sizeable assets in order to keep housing benefit. I would got advice from your local Citizens' Advice Bureau.

gozomark

7K penalty on a 40K fixed rate account doesn't sound right, so I presume its a with profits bond - ie an investment not savings - is that correct ?

morgwick

Thanks for the replies.

I don't think inheritance tax is an issue, as she doesn't own property etc, but I didn't know how it would affect her estate when the time comes, as the money would be in our names. Obviously we would make sure it was split correctly, but not sure legally how it would work.

I'm not sure whether the money is an investment or savings, but I do know that there was a fixed period. The bank apparently told my mother in law that the charge would be high due to the early closure and current market situations.

gozomark

its probably a guaranteed equity bond then

missile

I would suggest she simply gives the money now so that she can take pleasure, seeing the kids making good use of her bequest whilst she is still alive.

socrates

I think you should try this one on the benefits board

apt

That's very naive and probably poor advice missile. First it probably does not make sense to incur substantial financial penalties on the high income bond. Second what is proposed very likely comes under the heading of deliberate deprivation of assets and the income is likely to be included when assessing the mother-in-law's means-tested benefits. The OP and mother-in-law really do need expert advice on what is permissable and the financial and legal consequences of the various options.

Hungerdunger

Why should the Council Tax payers in her area subsidise her rent just so that she can leave money to her children?

As apt has said, what you are proposing sounds like Deprivation of Capital. If indeed someone in the LA did advise her to do this, they are almost certainly mis-advising her.

adambro

Hungerdunger wrote: »

Why should the Council Tax payers in her area subsidise her rent just so that she can leave money to her children?

My thoughts exactly.