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ISAs - a cautionary tale

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9 years 5 days ago #131916 by QX81
Replied by QX81 on topic ISAs - a cautionary tale
It's not a problem to have an ISA as long as the value is under £6,000, as bro58 as stated.

However, an ISA is treated in law as different from other savings accounts.There are two terms that are used to describe money in an account and they are "legal" and "beneficial".

The legal owner is the person in whose name the account is in.

The beneficial owner is the person to whom that money "belongs".

For example, when the DWP pay benefits for an adult with learning disability (the claimant) into an "appointee account" (in the name of his appointee), the appointee is the legal owner but the claimant is the beneficial owner.

All normal bank and savings accounts can have money in them that is not necessarily "beneficially owned" by the person in whose name the account is in.

However, the law states that money in an ISA is both legally and beneficially owned by the person in whose name the account is held, regardless of whether ir not that is the case.

This means that if it's in an ISA that is in your name, then the DWP will decide that it is yours .... full stop, end of story.

If ever you happen to lend some money to your son or daughter, make sure that they don't put it into an ISA, because they can then claim that you have "gifted the money" to them.

I did ask the DM what would happen in this case, and he said that they would only consider it a loan if an agreed repayment date with a solicitor's letter to prove had been agreed. At all other times, they would just ignore the loan situation and say that the money belonged "both legally and beneficially" to your son / daughter.

He also told me that lots of well meaning family members are now falling into this trap, and they always lose the case. Even if your son paid the loan back and decided to look for a job on job seekers allowance, the DWP would take the view that he had deprived himself of the capital in his ISA to enable him to claim benefits.
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  • jnms
9 years 4 days ago #131995 by jnms
Replied by jnms on topic ISAs - a cautionary tale
Interesting information QX81, that clarifies a lot. Thankyou!

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  • jnms
9 years 1 day ago #132243 by jnms
Replied by jnms on topic ISAs - a cautionary tale
Sorry to bump this but I was just wondering about ISAs and the capital limit.

What if you have a ISA that is over £6000 but fluctuates quite a lot in value over time, such as a stocks and shares ISA? How would the DWP establish the "income" from that ISA? It's impossible to calculate on a daily basis. There must be a specific regulation to address this?

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9 years 1 day ago #132250 by Gordon
Replied by Gordon on topic ISAs - a cautionary tale

jnms wrote: Sorry to bump this but I was just wondering about ISAs and the capital limit.

What if you have a ISA that is over £6000 but fluctuates quite a lot in value over time, such as a stocks and shares ISA? How would the DWP establish the "income" from that ISA? It's impossible to calculate on a daily basis. There must be a specific regulation to address this?


I am afraid that ISA's are treated in the same way as any capital (not income), that a claimant may have.

Deductions are stepped in £250 bands, see the following

Asset rule for ESA(IR)

You are required, as a condition of receiving an Income Related benefit, to report any change to the total value of your capital if an increase results in you crossing one of these trigger points even if it is only by 1p, it may be possible to argue that an average value should be used where the total varies from day to day, but you cannot assume that the DWP will accept this, you would need written confirmation from them that you can do this.

Gordon

Nothing on this board constitutes legal advice - always consult a professional about specific problems

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9 years 1 day ago #132292 by David
Replied by David on topic ISAs - a cautionary tale
Now adays it seems to becoming vital to take professional advice form a registered & qualified financial person.
When we had an inheritance from my MIL , we initially thought some of it could be worked profitably in an ISA for me to also put it towards Munchkins university fees in about five years time .

Thankfully our qualified and registered financial advisor advisor and his company are on the ball and we were told of the pitfalls. Otherwise we'd have been in the same sort of boat as the OP .

We will also be listening hard at their advice on drawing down pension pots etc for what they are saying often seems quite different to the financial column advice in the newspapers etc . and even further afield than that of banks and building societies . For it appear to me that they only promote their own profit making schemes from which you the investor will only recieve a pittance . .

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