Housing Benefit and savings rules

[the_shadow]

I'm after a bit of advice in a field I have absolutely no Knowledge in at all...

 

My sister is a single mother bringing up three kids, she works with disabled children less than 16 hours a week and received tax credits and a small amount of housing benefit. She had no savings to speak of.

 

6 years ago she was knocked over by a dog whilst out walking her own dog and luckily the dog owner was insured, its taken 6 years for the case to finally be resolved and she has been awarded a lump sum to cover her medical bills in the future as they estimate she will need two knee replacements as she struggles to walk distances now.

 

The initial plan was to have this money put into a trust which then wouldnt affect the benefit she receives and a solicitor drew up a trust form with two trustees (myself being one). When applying to the bank however they have declined to accept the trust and cited bad credit reports, both myself and my sister have bad credit files through various circumstances.

 

so I wonder will the lump sum be taken as pure savings despite having a planned use? and hence affect the housing benefit.

 

S.

[dx100uk]

is this not covered under the medical insurance payout area

just done oe [well ctax benny]

sure saw a box about that.

 

just guessing

 

dx

[ErikaPNP]

As I understand it, any lump sum personal injury payment (including an out of court settlement by an insurance company) which is not held in trust will be disregarded for 52 weeks or until the payment is spent, whichever occurs first.

 

Once the 52 weeks have expired, it will be treated as capital. If the amount is under £6000, it will not affect her housing benefit. If it is between £6000 and £16000, her housing benefit will be reduced for every £250 or part thereof between £6000 and £16000. If it's over £16000, she will become disentitled to housing benefit.

[Slatted]

I was just wondering how a bank has the right to determine who is a trustee, surely the Solicitor has set it up with formal papers and there are terms and conditions as to the duties and rights etc of trustees and beneficiaries so any default would be legally pusuant by the beneficiary etc. Are there not types of account where no overdrafts are allowed and from where the money could be administered?

 

Where does the bank come into the decision about the viability of the trust? Surely all they are saying is about the risk of allowing an account and I thought that the trust would hold different rules to those for a standard accountholder.

 

Have you tried other banks?

 

Is there not anyone else who could act as trustee....even the Solicitor could do so, or their office act as such, at cost I believe?

[the_shadow]

Thanks Peeps

 

Slatted... the banks have the right to say who can co-sign cheques on behalf of the trust. Unfortunately the bank in question HSBC would appear to like American Drug money invested in its accounts rather than a small trust fund entrusted to them to ensure my sister has her two knee replacements and possible adjustments to her home to help later in life.

 

I do have history with this bank in that I have a default for an overdraft, but I've been paying it off and in two months it'll be nil, add to that they hold over 20k in a private pension for me and yet still declined me being a co-signature.

 

I did warn my sister of my bad credit before she chose me but she said and I'm immensely proud of it that I was one of a handful of people she would trust her life/livelihood with. To change the Trust documents drawn up with a solicitor would require more expenditure.

 

In the end I think she may just give up and pay the cheque into a normal account and take the hit on HB.

 

S.

[Slatted]

Is there any reason your sister wants the trust account at HSBC? I am not sure all banks are the same and it would really be a shame if the trust were not to go ahead.

 

I think banks are getting far too big for themselves....as if the law would not have something to say if you did something wrong with regard to the trust account....and, of course, your sister!

 

Is there any other place the account could be run, Post Office for instance?

[the_shadow]

Not many banks offer it apparently, its not worth their while.

 

She's rung round 4 today and none do it, I suspect she'll give up, she's a bit fed up.

 

S.

[fightingback99]

You should take this up with HSBC management. As long as any cheques require 2 signatures, the account has no overdraft facilities and no online fund transfer access they've no reason to decline, as the account will always be in credit, and there's no risk to the bank. RBS may still do them.

 

Only thing I know of that has to be declared before being a Trustee is if there are any outstanding court judgement for debts.

[Slatted]

I am not sure if it is relevant but a similar issue occured about registering an EPA on someones bank and CAB said that were not sure if bank had right to deny legal right of person who had elected that person...maybe it is the same here?

 

Sorry but I do not know the outcome of the other issue as lost contact before it was resolved.

 

Surely the banks may voice concern but if they are not liable for what happens on the account and no debts are allowed (i.e. overdraft) then I really do not see what the big deal is...

[assisted blonde]

Did you actually go into the bank and see a person, as you often get a totally different result when you are dealing face to face.

[the_shadow]

Did you actually go into the bank and see a person, as you often get a totally different result when you are dealing face to face.

 

I actually didnt go anywhere,its my sister's trust and she applied in person bringing back the application to fill out.

 

Unfortunately like any account these are opened with an application form that is 8 pages, not all relevant but the last two are on the proposed trustees, this then gets sent to head office who decide if the account is opened or not... typically takes a couple of weeks but HSBC also managed to lose the document internally for a week and a half.

 

S.

[the_shadow]

Surely the banks may voice concern but if they are not liable for what happens on the account and no debts are allowed (i.e. overdraft) then I really do not see what the big deal is...

 

Me neither tbh but they have the "right" to turn down an application for an account and thats what they've done.

[Slatted]

Did your sister try and appeal the decision? It sounds as if it may be more a case of "computer says no" because inputs show alerts....maybe the fact that it is a specific account for a trust and trustees has not really been registered? I really cannot see how a bank has the right to refuse the trustees that have been legally elected by the customer.

 

Would there be a better chance if the money were invested in some type of bond, held in trust, I wonder? Not sure if this is possible but I know bonds allow withdrawals and are often written in trust...and do not require a bank account?

[the_shadow]

The appeal (another form) also has to go off to head office and will take up to 6 weeks apparently :-/

 

Thanks for all the posts guy's but I'm going to leave things until she decides what she wants to do, I've passed on the info about 52weeks and now await her decision on applying to another bank and possibly facing rejection again, appealing the original decision OR just paying the money into a normal account.

 

S.

[Slatted]

I would seriously suggest she lookes into a bond written in trust...may have ones with no risk...Govt ones? Keeps the money out of calc and is still easy access as you can normally have a number of withdrawals in a year......why risk the 52 weeks if she does not have to?