The CSA and Inheritance

vonsworld

I already pay a reasonable amount of child support through the CSA, which I am pleased to do, but would like to manage as far as possible what additional amounts I may have to pay in the future. I therefore have a few questions, please could someone advise me:

I understand that the CSA cannot claim anything from the home you actually live in, regardless of whether you have paid for it yourself or inherited it perhaps from your parents.

However if you inherit a second house and sell it with the intention of investing the proceeds, can the CSA claim a part of the lump sum from the sale, or only a percentage of the subsequent interest earned from the investment?

Alternatively if you inherit and then rent out a property can the CSA claim a percentage of the income from the rental?

How would the CSA find out about either of the above situations if you simply didn’t tell your former partner of the inheritance?

I know the CSA can monitor your income from a job and contact your employer, but do they have the power to monitor your bank account or income from other sources such as inheritance, the sale of property or interest on investments?

I am not trying to avoid the CSA as such, I already pay a reasonable regular amount, I am just trying to manage my finances in the future, and would like to discover my rights regarding inheritance.

Thanks

DUTR

Assets over £65k car considered at a ridiculous 8% per annum (which savings account pays that?)
How would they know? they have their means, but keeping your mouth shut from the ones that may get to hear about your 'fortune' may tip the authorities, after all why should you live 1st class whilst they struggle to keep warm and fed?

spiritsfree

I believe your CS is based solely on income, however I`m sure Kevin will be along soon to give you accurate advice. If you are earning more through rental, if you go that way, then I`m sure you wouldn`t begrudge your children/child a portion of that...or would you ?....as that`s classed as income.

Sensemaya

Let's hope you put something away for your children from your previous relationship then...

kevin137

I'm not too sure about inheritance, not something that crops up very often, i know in Marriage, if you keep completely separate (cash) on divorce it can't be touched as part of the married estate for such purposes, so it would be strange that the CSA could touch it, however, there is probably an exclusion for income due to inheritance for CSA, they can be funny about that...

I am not so sure what the actual question is about, are you worried that they could take a lump of it...? Or that they will asses the money into what you currently earn and take it that way...???

Some good solid financial advice would be require if it is a big amount anyway, but a rented out property, should not really be in YOUR name, it should be registered to a Development Company for Tax purposes, and if this was the case, while you may own the company if there is no profit there is nothing they could touch i don't think... But don't quote me on that...

Will try to find out more info on inheritance and come back... Haha

kevin137

Ok, so the long and short of it is, YES they can... But they can only take if money an amount of 8% of gross interest.

So if you have £165,000 in the bank, then £100,000 would be the assessable amount, if you got 5% interest, then you would be assessed at 8% of the interest, is how i read it... This is added to your assessment and deducted from you wages as if you earned it weekly or monthly...

However, if you inherit a property, then it is only the amount ABOVE £65,000 which is mortgage free, so if you inherit a property worth £200,000 clear and free, the advice you should receive from a financial advisor familiar with CSA and other finances would be to mortgage and buy another property, as long as no property (in your name) has more than £65,000 equity then they cannot touch it... Bizzarre... Just go out and buy loads of property and sit back and wait 25 years till you have a huge windfall of property paid for because you wanted to avoid CSA...

I know that it doesn't work like that in reality, the best think to do is not avoid it, do not hide it, and get some good advice...!!!

Crellow4

If a Variation application were to be made the CSA looks at the aggregate o all assets. So if you had 7 properties all with £10,000 equity you would have an aggregate asset of £70000. This would be assessed at 8% and added to your weekly income in order to establish your maintenance liability.
In the example above Kevin137 has suggested that the first £65000 is ignored - this is not the case. Once your assets exceed £65000 the full amount is assessed at 8%.

RedSky

vonsworld wrote: »

However if you inherit a second house and sell it with the intention of investing the proceeds, can the CSA claim a part of the lump sum from the sale, or only a percentage of the subsequent interest earned from the investment?

In instances where an NRP holds assets valued over £65,000, CMEC calculate what income is derived from the capital held by using the statutory rate of of interest (8%, as set by the Ministry of Justice) to determine the CM liability.

vonsworld wrote: »

Alternatively if you inherit and then rent out a property can the CSA claim a percentage of the income from the rental?

Only by a variation as rental and dividend income are not normally included in assessments. This won't be the case with CSA3.

vonsworld wrote: »

How would the CSA find out about either of the above situations if you simply didn’t tell your former partner of the inheritance?

Only should you declare it.

vonsworld wrote: »

I know the CSA can monitor your income from a job and contact your employer, but do they have the power to monitor your bank account or income from other sources such as inheritance, the sale of property or interest on investments?

Usually CMEC don't monitor income, they only enquire about income from a certain period of time. It will be in unusual circumstances when CMEC enquire about bank accounts from credit reference agencies.

kevin137

Crellow4 wrote: »

If a Variation application were to be made the CSA looks at the aggregate o all assets. So if you had 7 properties all with £10,000 equity you would have an aggregate asset of £70000. This would be assessed at 8% and added to your weekly income in order to establish your maintenance liability.
In the example above Kevin137 has suggested that the first £65000 is ignored - this is not the case. Once your assets exceed £65000 the full amount is assessed at 8%.

I may of got that wrong, but i read it OVER £65,000 not including. if that was the case, then at £75,000 you would just buy a new car and bang you get nothing...! Bit like Inheritance tax, i don't know the figures, but i always thought that if you inherited below the death tax thresh hold then you paid nothing, but over it you paid the percentage of what was over not on the whole amount...

And regardless of what the limit is, it is very very simple to keep the equity UNDER the £65,000 for property, you up the value by spending on it to make the value more but the value for assessment would be the purchase price... SO you just keep moving the equity out and buying more property using the equity to "develop" the property before doing the same when the thresh hold is crossed...

Is that not what development companies do to reduce tax liability and draw wages...??? It is no different...

Crellow4

The value of the property for the assessment is not the purchase price! It is the value at the date of the variation application. If you buy a property and increase the value by developing it then the value of your asset has increased.

clearingout

kevin137 wrote: »

I'm not too sure about inheritance, not something that crops up very often, i know in Marriage, if you keep completely separate (cash) on divorce it can't be touched as part of the married estate for such purposes, so it would be strange that the CSA could touch it, however, there is probably an exclusion for income due to inheritance for CSA, they can be funny about that...

I am not so sure what the actual question is about, are you worried that they could take a lump of it...? Or that they will asses the money into what you currently earn and take it that way...???

Some good solid financial advice would be require if it is a big amount anyway, but a rented out property, should not really be in YOUR name, it should be registered to a Development Company for Tax purposes, and if this was the case, while you may own the company if there is no profit there is nothing they could touch i don't think... But don't quote me on that...

Will try to find out more info on inheritance and come back... Haha

This isn't true. Any asset - cash, property, business, inheritence...can be considered part of the marital 'pot' if accured in full or in part during marriage. It can also be the case if something were owned/cash accummulated prior to marriage/living with someone or even meeting them. For example, my ex had a house prior to meeting me. Some 7 years later (married about 5), I went on the mortgage. 5 years after that, we divorced. The whole of the equity (that accured prior to us living together as well as after I went on the mortgage) was included in divorce proceedings. Oddly, this is one of the few things my ex didn't contest.