Savings in trust

boltonangel

Hi

My son has some money in a savings account that was opened by his grandma and she is trustee on the account. She is now concerned that the money saved may affect her benefits and that perhaps she should declare it as technically she has access to the money but would never withdraw it as it's in my sons name.

I don't know the answer, can anyone advise?

Tia

Your_Hero

boltonangel wrote: »

Hi

My son has some money in a savings account that was opened by his grandma and she is trustee on the account. She is now concerned that the money saved may affect her benefits and that perhaps she should declare it as technically she has access to the money but would never withdraw it as it's in my sons name.

I don't know the answer, can anyone advise?

Tia

Most probably a bare trust (and not a designated account since you mentioned trustee), in which case the interest is charged on the child and not the grandparent. Since your son is probably not earning more than £10,000 (personal allowance), there will be no income tax to pay.

boltonangel

No he doesn't pay tax on it but will she have to declare it on benefit forms?

xylophone

The problem would seem to lie in the fact that even if the money is held in bare trust ( ie, beneficially owned by your son), grandma has the right of access and could draw the money out at any time and use it for herself?

She could declare herself as settlor and trustee of the bare trust but could be required to prove that she is not accessing the money?

For the avoidance of doubt, might it not be better for the money to be paid into the child's CTF/JISA?

The other problem I could foresee is that regardless of whether the money was or was not in CTF/JISA, if the amount of money that grandma has gifted is enough to reduce her capital to the point where she qualifies for means tested benefits, questions could be asked?