What name should child's savings account be in? Dispute with council

maf66

First post here. I'm in need of some advice on behalf of my father. I apologise if this is not the correct forum.

My father is retired and is in dispute with his local council over the level of his own savings. He is currently just below the £16,000 limit to qualify for a discounted council tax. However he also has 2 savings accounts for his grandchildren which the council say are in his name and thus counts towards his savings total, thus taking him over the £16,000 limit.

The accounts are in the name of 'Mr xxxx in re. xxxx'. The council argue he can still withdraw money from these accounts so are counted in the total.

He has no intention of withdrawing the funds and wants to save for his grandchildren's future. The grandchildren are 6 & 5 years old.

In what name should he hold the accounts in? I was thinking maybe 'Mr xxxx trustee of xxxx'?

Many thanks.

Mistermeaner

Not sure but i think they need to be in t h e kids names and your dad have no acccess.

Honest people in a dishonest world: unfortunately if the rules werent such there is an easy loophole there for people to exploit.

Best move the accounts to child trust funds or similar

xylophone

The trouble would seem to be that even though if held in bare trust, the money belongs to the children absolutely, your father has access and control.

Under the circumstances, it might be best to use the CTF - you will be the named contact, not your father.

The CTF will be transferable to the more flexible JISA in the next tax year.

https://www.gov.uk/child-trust-funds/overview

xylophone

It also occurs to me that the council might take the view that by making gifts (above a few pounds for Christmas and birthdays), he is depriving himself of capital in order to keep or increase means tested benefits?

System

The council is arguing that he could/should commit a criminal offence and steal his grandchildren's money in order to pay his council tax?
Is that ethical?

Hooloovoo

Clifford_Pope wrote: »

The council is arguing that he could/should commit a criminal offence and steal his grandchildren's money in order to pay his council tax?
Is that ethical?

Is it ethical for the tax payer to contribute (in terms of a tax discount) in order to allow someone to make gifts to their grandchildren?

Archi_Bald

Clifford_Pope wrote: »

The council is arguing that he could/should commit a criminal offence and steal his grandchildren's money in order to pay his council tax?
Is that ethical?

The accounts are in his name. There is nothing criminal about him taking money out of these accounts.

sinizterguy

The accounts I have for my children (which I asked the bank to open in their name) actually is in "myname ITF childsname"

I'm guesssing ITF = In Trust For

I can operate it the same as any of my accounts along with my on-line banking.

N1AK

Hooloovoo wrote: »

Is it ethical for the tax payer to contribute (in terms of a tax discount) in order to allow someone to make gifts to their grandchildren?

Surely it is a matter of degrees? If he put put a few thousand aside for the kids at birth 5-6 years ago then I don't think that is an unethical abuse of the system.

Where exactly would you want the line to be drawn? If I gave a few thousand to my, much younger, cousins now that's money I won't have when I retire. Is that unethical? If I spent the money on a big holiday instead is that unethical if I then need council support in later life?

bowlhead99

maf66 wrote: »

He has no intention of withdrawing the funds and wants to save for his grandchildren's future. The grandchildren are 6 & 5 years old.

In what name should he hold the accounts in? I was thinking maybe 'Mr xxxx trustee of xxxx'?

As trustee of, or as trustee for, is a stronger wording as it does imply you are holding it on trust for the child and it is the child's money and is taxed and considered for benefits as if it were theirs. Even if you can access and control the funds you cannot benefit from it because it is not yours - in that situation, spending it on your own bills that were not for the benefit of the child would be wrong and the council would respect that on some basic level.

But simply saying 're' the initials, is a simple designation that may merely indicate you are planning to give it away to them at some future point. I have a broker account 're' my nephew but it is still my money, taxed as mine, and if I need use it to run my own life (paying my own mortgage and bills, including council tax....) then I am just going to have to give up on the plan to give it away to him at some future point. It's not protected from creditors if I still have the money in my own name and merely plan to give it away at some future point. To protect it, I would need to give it away now - to the child (e.g. into their CTF), or into trust (of which I could be the trustee but could not use the money for my own purposes).

So, a 'bare trust' situation would work fine for saying the money is not yours, if that's what you're trying to achieve. But to accomplish this and have 'as trustee' stamped on the bank account name, I would speculate that the bank might want to see a document showing that the trust exists (some banks or other financial institutions may have a simple document you could use, or do it automatically when they create the account).

Having said all the above, the mere fact that putting the assets into trust would get the assets off his personal balance sheet in a legal sense, doesn't mean he has not done that simply to "deprive himself of capital in order to keep or increase means tested benefits" as xylophone says, particularly as the council has already started to look at his affairs as someone who is borderline for benefits. So it doesn't necessarily mean they will just entirely discount the gifts to the children.

If the accounts have been running for some years and have gradually ticked up in value here and there, that is probably quite reasonable for a loving grandfather to give them a few pounds now and then out of his ongoing small income. However if he had £18k of capital and then a few months ago he suddenly 'gave away' £2k to his grandkids, qualifying him for benefits, and continues to top up the accounts every time his own balances get close to going over £16k... then that is classic deprivation of capital as described by xylophone. Simply having 'trustee for the kids' on the account doesn't mean you are not deliberately giving money away to that trust to maximise your benefits and your family's overall wealth, which is something that the council are within their rights to investigate.

You generally find that children can have accounts in their own name, without having to have a parent or grandparent's name first on the account, from about the age of 7. There are some exceptions to that age of course, with the different banks. That would make it more clear cut in terms of whose money it is. But still wouldn't entirely stop the council from at least considering whether there was an intentional deprivation of capital going on, if the grandad kept making regular large gifts out of his current account to someone else such as a non-dependent child or grandchild.

I referred to the age of 7, which is the general rule about when a child can operate the account themselves and have it in their own name subject to the bank agreeing to that (some banks being different). Sounds like the children in this scenario are not far off that age. https://www.moneyadviceservice.org.uk/en/articles/childrens-savings-accounts

By way of explanation to the council, you could point the council to the guidance notes at that page which mentions "Children over seven can operate their savings account themselves – depending on the account, they can take money out and pay it in" and say that the money does fully belong to the child and has been given to them in good faith at some point in the past - but you had to put the grandfather's name on it because the children were 4 or 5 or 6 at the time of opening the account, which is under 7, and you didn't want to put the parent's name on the account because they could not have been trusted with it. It might help them understand the point of view.

But as mentioned, if you are simply choosing to give money away to family to keep you under the benefit threshold, that's still considered to be breaking the rules and the council have to consider whether the pattern of activity indicates you are just trying to game the system to get a benefit.

Archi_Bald

N1AK wrote: »

Surely it is a matter of degrees? If he put put a few thousand aside for the kids at birth 5-6 years ago then I don't think that is an unethical abuse of the system.

Where exactly would you want the line to be drawn? If I gave a few thousand to my, much younger, cousins now that's money I won't have when I retire. Is that unethical? If I spent the money on a big holiday instead is that unethical if I then need council support in later life?

I don't think the people in the council should be applying "degrees" when establishing the balances in people's bank accounts. It is simply black and white - if there are accounts that carry your name, you have access to the money, so it counts as your money, end of.

The council will also have clear rules what they consider deprivation of assets, and will be able to decline benefits if those rules have been broken.