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Life insurance payout & benefits

Surrey Adviser
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Benefits and debt adviser - Esher CAB, Surrey

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Total Posts: 222

Joined: 17 June 2010

Cl. recently widowed & has 3 yr old daughter.  She has received a substantial life insurance payment - 50% for her & 50% for her daughter.  (Cheques received but not yet paid in.)  Each of the payments is more than £16K.  She is currently on HB, CTR, CTC & IS.  She has enquired about the possibility of putting the money into trust.

I have advised I can see no way of doing anything with her own share, so her HB, CTR & IS will stop.  Her daughter’s share will have to go into some sort of trust.  If Cl.‘s share reduces later to less than £16K she will need to re-claim HB etc.  Would any income from daughter’s share be treated as Cl. income in assessing benefit?  I’ve a vague recollection that it might, but don’t have access to CPAG at the moment.

Any advice or other views welcome.  Thank you.