bereaved childrens trust funds affect benefits?????

craziemaisie

During the past few months my life has completely changed. i had previously worked full time until my 3 childrens dad unexpectanly past away therefore reducing my working hours to part time so i could look after my children. As a result of this i was in receipt of tax credits and council tax benefit. I have since received a letter today outlining the following:
as a result of the children receiving life insurance (which has now been put into trust until they are 18) i will no longer be receiving benefits as the amounts exceed 16,000.
I am completely shocked by this as how am i to support my children until they are 18 without these additional benefits.
Has anybody had any similar experiences as im worried what impact this will have on family life xx

paddedjohn

where the children named as beneficiaries on the policy or have you put the money away for them yourself?

craziemaisie

The policy did not name the children however they were named on my probate certificate as the beneficiaries but it was myself who then put the money into trust funds for them individually x

[Deleted User]

childrens savings upto £3000 are ignored,but i`m not sure about trust funds i always thought they would/could be ignored if the money couldnt be accessed,i would suggest you get legal advice or at least cab or welfare rights

paddedjohn

You can support your children with the money from the life policy, why else would their father take one out if not to see that you didnt go without.

craziemaisie

the money had to go into trust until they wer 18 therefore i cant access the money

paddedjohn

If you cant access it then as far as i know is should be disregarded for benefit purposes. Why did the money have to go into trust for the kids?

rogerblack

craziemaisie wrote: »

The policy did not name the children however they were named on my probate certificate as the beneficiaries but it was myself who then put the money into trust funds for them individually x

You are being treated as if you have deprived yourself of the capital, in order to get benefits.
In general, you can only put money into trust without affecting benefits if you have no legal option to avoid doing this.

I do not recall any exception for money willed to children.
Did you get legal advice about doing this?

If you are held to have done this for benefits purposes, then the it's treated as 'notional capital', which will be as if you had the money still in your account. This is 'notional capital', which can be reduced over time as if you had to spend it on council tax.
(If you would otherwise have qualified for CTB)

http://www.dwp.gov.uk/docs/dmgch29.pdf These are the rules on capital - for JSA.
Other benefits are similar, or identical.
See 29805 and subsequent.

Is there any way you can wind up the trust?
If you can, there may be more benefits efficient ways to spend the money.

cosmic-dust

craziemaisie wrote: »

The policy did not name the children however they were named on my probate certificate as the beneficiaries but it was myself who then put the money into trust funds for them individually x

Sadly this is where it all went wrong. The money (life insurance) was left to the spouse (you), but you made the decision to lock that money away in trust funds for your children until they are 18 and as such the DWP have said you have deprived yourself of this money.

In your first post you say :

As a result of this i was in receipt of tax credits and council tax benefit. I have since received a letter today outlining the following:
as a result of the children receiving life insurance (which has now been put into trust until they are 18) i will no longer be receiving benefits as the amounts exceed 16,000.
I am completely shocked by this as how am i to support my children until they are 18 without these additional benefits.

So the only benefit that is affected is your council tax benefit, as tax credits don't take savings into account.

merlin68

Universal credits will though. Savings over £16,000 result in a nil payment.
But then life insurance is meant to support a family on death anyway, that is what it's for.

craziemaisie

As the children's dad and I were no longer together when he passed away I was advised by the money had to go straight into trust. I had no option other than to put it there until they were 18. I would have used this policy as a means of support for my children for the next 13 years until they reached 18 but this was clearly not an option. The money had to be put away and not accessed. My hands were tied x