Will my children's saving effect benefit?

lindsey3uk

Hi,
I am wondering if anyone knows if my children having savings will effect my IS and CTC?

My husband and I separated last year and we have a property together. I want to get my name off of the property because it is effecting me getting a council place. I don't earn or have never earner a penny out of it. I have very little to do with it now.

There is about £50,000 in the property and I know this would effect my benefit but if I gave my half to my children which was the original reason for buying the property as an investment for the children would this affect my benefits? I have 3 children so they would have about £5000 each I guess.

tomtontom

If you give money away in order to increase your benefit entitlement you will be treated as if you still have the money (notional capital).

BigAunty

How are you going about getting your name off the mortgage and giving you around 30k of the equity?

Generally, the only way is for the other joint owner to switch to sole ownership by demonstrating to a lender that they have sufficient income for the (re)mortgage (calculated via an income to loan ratio, find a mortgage calculator to see if he can manage this). Does he earn enough to have a mortgage in his sole name, one that releases an extra 30k to you if he doesn't have sufficient savings to pay you your share?

How has it affected your application for council property - what have they said about your application? Is this via the standard bidding process or by presenting yourself as homeless due to the relationship breakdown?

zagfles

For CTC the capital won't count whatever you do with it, but any interest you earn will (there's a £300 disregard for "other income" including interest)

Not sure about interest the children earn - there is a tax rule that states any interest earned by children over £100 that comes from a gift from the parent is treated as the parent's income. I can't find anything specific on this in the tax credits rules but they usually follow tax rules.

lindsey3uk

Thank you for your replies. To be honest I am only in the early stages of 'thinking about' this ATM. Basically we brought the property early on in our relationship. It is just a studio flat. We rented another bigger property which we all lived in as a family until recently when he moved out. He does currently live in the property as he had nowhere else to go.

I get HB for my private rented property but my current landlord is thinking about selling in September so I applied for a bidding number which I was declined because of my interest in the property.

We originally brought the property on a . 100% mortgage when the market was exceptionally poor and we basically got very lucky. We didn't put much into. A few £1000 to do it up and we rented it out and basically let it pay for itself until he started living in it in August.

If we were still friendly I would sign it over to him just to get my name off on the basis that any money he made out of it would be divided between our three children. However we are far from friendly and I feel that I would basically be giving him my share of the equity which is worth about £20,000 / £25000. It was an investment we made for our children. We have never made any savings accounts etc for them and I don't want them to miss out but I couldn't afford for my benefits to be cut. Can you sign a property over to a minor?

lindsey3uk

In addition and to answer your question big aunty - yes he could easily afford to remortgage and give me the equity. This wouldn't be a problem if he chose to buy me out.

cattie

Children's savings over a certain amount, I think it's £3k, do affect any means tested benefits, so yes your income support will be affected.

ViolaLass

So effectively you want the tax-payer to fund your kids' savings. Why should we?

(Might not be a 'nice' question, but it states the facts).

Indie_Kid

cattie wrote: »

Children's savings over a certain amount, I think it's £3k, do affect any means tested benefits, so yes your income support will be affected.

Isn't it only child benefits that are affected?

mikey_bach

I am assuming you have declared your property to I.S as well, the property will be subject to a disregard of twenty six weeks, but this may be extended under certain circumstances for a further twenty six, but after that it will be classed as capital and as your share is 25k this will close your I.S claim.

If he buys you out and just gives you the money and then you give it to your children then can and may be classed as deprivation of capital as well.

You cant just sign it over to him, you are entitled to your share, I would say seek some legal advice if possible.
He sounds if he is on a good wage and he should be supporting you more by giving you more money, and not you giving him your money.....

GirlFromMars_2

lindsey3uk wrote: »

Thank you for your replies. To be honest I am only in the early stages of 'thinking about' this ATM. Basically we brought the property early on in our relationship. It is just a studio flat. We rented another bigger property which we all lived in as a family until recently when he moved out. He does currently live in the property as he had nowhere else to go.

I get HB for my private rented property but my current landlord is thinking about selling in September so I applied for a bidding number which I was declined because of my interest in the property.

We originally brought the property on a . 100% mortgage when the market was exceptionally poor and we basically got very lucky. We didn't put much into. A few £1000 to do it up and we rented it out and basically let it pay for itself until he started living in it in August.

If we were still friendly I would sign it over to him just to get my name off on the basis that any money he made out of it would be divided between our three children. However we are far from friendly and I feel that I would basically be giving him my share of the equity which is worth about £20,000 / £25000. It was an investment we made for our children. We have never made any savings accounts etc for them and I don't want them to miss out but I couldn't afford for my benefits to be cut. Can you sign a property over to a minor?

It sounds like you need to be in the advanced stages of thinking about this very quickly.

A £25,000 share in a property you don't live in disqualifies you for income related benefits including Income Support, Local Housing Allowance and Housing Benefit. Unless the property is counted as Disregarded Capital for some reason?

Are you actively selling it? ... this is one reason it could be disregarded for 26 weeks. Another would be if a close relative with a disability lived there it could be disregarded permanently (an ex-husband doesn't count!)

You cannot give this capital away to either your ex husband or your children, as the DWP will count that as Deprivation of Capital.

If you haven't told Income Support or the Council about this property then it is possible you aren't supposed to be in receipt of these benefits, and may well be asked to pay them back.

In all honest your best bet is to put this property on the market as soon as possible, and use this money to fund the purchase of a house you and the kids can live in.

It is possible you will owe some of this money back in overpaid Income Support/Local Housing Allowance, so you need to fix this as quickly as possible.