Terms & Conditions

[Vix]

This is technically a hypothetical situation as it hasn’t happened yet, but we are pre-empting it.

A claimant has just split from her husband & they are selling the marital home. Claimant stands to receive approx £30,000 when its all over. Clmt is currently claiming Income support & looks after her 3yr old twins.

She is expecting to rent privately (currently still living at home) as she doesn’t think it advisable to use the money from the sale for a deposit as she won’t be able to afford a £100K mortgage in order to buy. She is looking into putting some capital into trust for her children as she doesn’t know what the future holds. She is also hoping to go self employed in the new year. At this time we haven’t advised her of the capital limits as she’s getting Income Support.

In the event of her coming off I/S and claiming benefit, how do we treat the money she’s intending to put in trust to her children when its put in trust? Is it her capital / their capital / deprived capital?

Any advise welcome,
cheers Vicky

[emmadring]

IMO it should be treated as the children’s capital as she will have no beneficial interest in it once it has been put in trust (although she will still hold the legal interest as the money will be held in her name).

I don’t think you can really know whether she will have deprived herself so as to be treated as still possessing the capital until she actually applies for benefit having disposed of the money. An important factor to consider is the timing of the disposal and the subsequent claim, and you won’t know that until it happens. Also she must have knowledge of the capital limit to fall within the notional capital reg. It doesn’t sound from what you’ve said that her purpose is to secure entitlement to benfits, but then again there only needs to be a ‘significant operative purpose’.

The commentary in CPAG concerning the purpose in disposing of the money is good.

[Vix]

cheers

[Author]

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