Aviva has reported that wealth net flows rose to £7.7bn in the third quarter of the year as demand for its adviser platform grows.

Platform net flows were up 76% to £3.1bn, reflecting strong growth in its financial adviser platform business, including Succession Wealth and Direct Wealth.

Aviva said in a trading update today (14 November) that it has achieved another quarter of “strong delivery and profitable growth” across all areas the business.

Protection sales increased by 44% following the completion of the AIG UK protection acquisition in April. The group’s general insurance premiums also rose by 15% to £9.1bn.

Retirement sales are up 67% to £6.1bn, driven by higher demand in the bulk purchase annuity market.

Amanda Blanc, group chief executive, said: “Quarter after quarter, we are delivering consistently superior results and growing Aviva, particularly in the capital-light businesses. General insurance premiums are up 15%, and wealth net flows of £7.7bn are 21% higher, reflecting continued growth in workplace pensions and strong demand from our financial adviser platform business.

“Aviva’s large and growing customer base is a major advantage, contributing to our excellent performance. Over the last four years we have increased customer numbers by 1.2m to 19.6m. We now have five million UK customers with more than one policy and, as the UK’s leading diversified insurer, the potential to grow this further is huge.

“Aviva is financially strong, trading well each quarter, and has significant opportunities for further growth. We are confident about the outlook for the rest of 2024 and beyond, growing the dividend and achieving the Group’s financial targets.”

MILLIONS of Apple iPhone and iPad users could be owed a £70 payout after a consumer group accused the tech giant of ripping customers off.

Which? claims the computer and electronics company is breaching competition law by forcing people to use its iCloud services.

1

ICloud lets you securely store your photos, files, notes, passwords and other data.

It also acts as a backup in case you lose your phone or it is stolen.

But Which? says Apple has encouraged users to sign up to iCloud while making it difficult to use other products at the same time.

The consumer group claims Apple doesn’t let customers store or back up all of their phone’s data with a third-party provider, and they have to pay when the amount of data stored breach a 5GB limit.

Which? also says Apple customers are being overcharged for iCloud subscriptions.

It said this is partly because of the tech giant’s dominance of the market meaning it is difficult for alternative services to gain traction and offer competition.

The consumer champion is seeking damages for customers who have obtained iCloud services since October 1, 2015.

It estimates this is around 40million people, and that individual customers could be owed an average of £70.

However, you could receive more or less than this based on how long you have been using the iCloud service.

Which? chief executive Anabel Hoult said: “We believe Apple customers are owed nearly £3 billion as a result of the tech giant forcing its iCloud services on customers and cutting off competition from rival services.

“By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off UK consumers without facing repercussions.

“Taking this legal action means we can help consumers to get the redress that they are owed, deter similar behaviour in the future, and create a better, more competitive market.”

A spokesperson for Apple UK said: “Apple believes in providing our customers with choices.

“Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage.

“In addition, we work hard to make data transfer as easy as possible – whether its to iCloud or another service.

“We reject any suggestion that our iCloud practices are anticompetitive and will vigorously defend against any legal claim otherwise.”

What happens next?

Which? is urging Apple to settle the claim without the need to take the case to tribunal.

The consumer group is asking that Apple offers iCloud customers their money back and allows customers “real choice” of cloud provider.

If this doesn’t happen, Which? will ask the Competition Appeal Tribunal’s permission for the claim to proceed – what’s known as a “certification”.

A hearing would then be set for Which? to put its case forward.

There’s no guarantee that compensation will be issued to iPhone and iPad users – only if the case is won at tribunal.

You can register your claim and see if you could be eligible for compensation via cloudclaim.co.uk.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

Filing for bankruptcy can seem overwhelming, especially when finances are tight. There are ways to tackle the process even if funds are limited, ensuring individuals access the protection they need. This guide explores the steps necessary to file for bankruptcy without incurring additional financial strain. Filing for bankruptcy can be a daunting task, especially when finances are stretched thin.

For those worried about costs, options exist that can significantly ease the burden. Some legal aid organizations offer services at reduced rates or can help individuals file on their own. Pro bono services from attorneys may also be available, especially for those who demonstrate financial hardship. It might seem counterintuitive to spend money when you are already facing financial difficulty, but there are options available for those who need to navigate this process with limited funds.

Navigating the legal landscape requires understanding the necessary forms and procedures. It’s important to gather all financial documents and organize them diligently. This preparation allows individuals to efficiently complete filing requirements efficiently, making the process smoother even without upfront legal fees. Understanding how to file bankruptcy with no money can open doors to financial relief and a fresh start.

Understanding Bankruptcy

Bankruptcy is a legal process designed to help individuals or businesses manage or eliminate debts. The following examines the basic principles of bankruptcy and the different types available.

The Basics of Bankruptcy

Bankruptcy provides a way to address overwhelming debt when repayment seems impossible. The process is initiated by the debtor, who submits a petition to a bankruptcy court. This petition includes detailed financial information, outlining assets, liabilities, and income.

The court assesses this information to decide how the debts can be managed or eliminated. Once a petition is filed, creditors are notified, and an automatic stay is issued. This stay prevents creditors from collecting debts, garnishing wages, or seizing property until the case is resolved.

Types of Bankruptcy

Bankruptcy comes in various forms, commonly known as chapters. The most prevalent types include Chapter 7, Chapter 11, and Chapter 13. Each type serves different needs and circumstances.

Chapter 7 Bankruptcy: Often referred to as liquidation bankruptcy, it involves selling non-exempt assets to pay off creditors. It’s suitable for individuals or businesses with limited income and few assets.

Chapter 11 Bankruptcy: Primarily used by businesses, it allows a company to reorganize its debts while continuing operations. This type helps businesses restructure their obligations and emerge later as profitable entities.

Chapter 13 Bankruptcy: Also known as a wage earner’s plan, it enables individuals with regular income to develop a plan to repay all or part of their debts over time. This chapter provides the opportunity to keep assets, such as a house while paying debts over three to five years.

Eligibility for Bankruptcy

Determining if you are eligible for bankruptcy involves examining your financial state and completing a means test. These essential steps provide insight into whether filing for bankruptcy is a viable option.

Evaluating Your Financial Situation

To determine eligibility for bankruptcy, start with a thorough review of your financial situation. This includes calculating total debts and comparing them to income and assets. Identify what debts are unsecured, like credit cards, and those that are secured, like mortgages.

Make a list of all creditors, outstanding balances, and monthly obligations. Evaluating cash flow is also crucial; to determine if monthly income exceeds essential living expenses. Any significant changes in income or unexpected expenses can affect eligibility.

Assets play a critical role as well. Identify what can be exempt based on local laws, such as a primary residence or personal property. This assessment provides a foundation for understanding your financial position.

Means Test for Bankruptcy

The means test is a crucial component in the bankruptcy eligibility process, specifically for Chapter 7 bankruptcy. This test evaluates whether your income is low enough to qualify. The test compares your average monthly income against the median income for similar household sizes in your state.

If your income falls below the state median, Chapter 7 may be an option. Attach proof of income, such as pay stubs and tax returns, to the means test calculation. If above the median, a secondary test of expendable income might be required.

Ensure accurate records of income and expenses to avoid complications. Keep in mind the means test is specific to Chapter 7; Chapter 13 bankruptcy has different requirements focusing on debt repayment capabilities.

Bankruptcy Without Money

Filing for bankruptcy without financial resources can seem daunting. Key strategies include seeking fee waivers and exploring legal aid options to ensure access to necessary assistance.

Filing Fees and Waivers

Filing for bankruptcy involves fees that may be challenging without sufficient funds. The U.S. Bankruptcy Court charges a filing fee, which can be several hundred dollars, depending on the type of bankruptcy filed.

For those unable to pay, fee waivers or payment plans are options. Applicants can request a waiver by submitting an application demonstrating their income is below 150% of the federal poverty line. Payment plans, which allow the fees to be paid in instalments, can also be arranged.

Eligibility for these options depends on individual financial circumstances, emphasizing the need for accurate documentation. Courts evaluate each request carefully, looking for proof of financial hardship. It’s crucial to be thorough when preparing the waiver application to increase the chances of approval.

Pro Bono and Legal Aid

Securing legal assistance is critical in navigating the complexities of bankruptcy. Fortunately, individuals with limited means can access pro bono legal services. These services are offered by attorneys who volunteer their time to assist those who cannot afford legal fees.

Many organizations offer legal aid specifically tailored to low-income individuals. National and local organizations, such as Legal Aid Societies and Bar Associations, often have resources for those seeking bankruptcy assistance. They can offer indispensable guidance through the legal process, ensuring proper paperwork and compliance with court procedures.

Connecting with these resources early can greatly aid in managing the bankruptcy process effectively. It’s advisable to contact local legal aid services to explore available options and find appropriate support.

Steps to File for Bankruptcy

Filing for bankruptcy involves several steps that include gathering essential documents and completing a credit counselling session. Each of these elements is crucial for a successful filing process and provides foundational support for navigating financial challenges.

Gathering Necessary Documentation

To start, individuals must collect all the required documentation. This typically includes income proof, recent tax returns, bank statements, and details of assets and liabilities. Each document plays a vital role in accurately processing the bankruptcy filing.

Organizing these documents in advance can prevent delays. For income proof, pay stubs or a letter from the employer may be needed. Tax returns provide a thorough picture of financial history. Ensure that all statements are current and correctly reflect the financial situation to aid in smooth processing.

Credit Counseling Requirement

Before filing, one must complete a credit counselling session from an approved agency. This is mandatory to assess whether bankruptcy is the appropriate option. This session usually lasts about 60 to 90 minutes and can be completed online or over the phone.

During this session, the counsellor reviews financial circumstances. They might suggest alternatives like debt management or restructuring but will provide a certificate upon completion. This certificate must be filed with the bankruptcy application. It not only meets legal requirements but also provides valuable insights into financial planning.

Chapter 11 Filing Process

Chapter 11 Bankruptcy allows businesses to reorganize their debts under court supervision. It involves several steps, starting with a petition that initiates the case and triggers an automatic stay, which temporarily halts debt collection efforts.

Filing the Petition

The process begins with the debtor filing a voluntary petition in the bankruptcy court. This document requires detailed information, including the business’s assets, liabilities, and a statement of financial affairs. Schedules detailing income, expenditures, and executory contracts must also be submitted.

Legal fees can be substantial. Although some attorneys offer flexible payment arrangements, the debtor must ensure all documents comply with the Bankruptcy Code to avoid dismissal. The court will assign a trustee, although the debtor typically retains control of business operations.

Automatic Stay

Once the petition is filed, an automatic stay is enacted. This halts most collection activities against the debtor, including lawsuits, foreclosures, and repossessions. Creditors must seek court permission to proceed with any existing actions.

The stay provides the debtor time to propose a reorganization plan without pressure from aggressive collection tactics. The court may grant relief from the stay under specific circumstances, such as if the creditor’s interests are not adequately protected. If violated, creditors could face penalties, ensuring compliance with the bankruptcy court’s policies.

Life After Bankruptcy

Experiencing bankruptcy can feel overwhelming, but it is also the beginning of a fresh financial start. Key steps involve rebuilding credit and adopting better financial management strategies.

Rebuilding Your Credit

Rebuilding credit is crucial after bankruptcy, as it impacts future financial opportunities. Individuals should start by checking their credit reports for accuracy and correcting any errors that may appear.

Using secured credit cards responsibly can help build a positive payment history. These cards require a deposit, which serves as collateral, making them more accessible to those with damaged credit.

Timely payments on utilities and rent can also be reported to credit bureaus, contributing positively to credit scores. Patience is important, as progress takes time but consistently good financial behavior will gradually improve credit ratings.

Financial Management Strategies

Developing sound financial management practices is vital post-bankruptcy. Budgeting plays a central role in managing expenses and avoiding future debt pitfalls.

Creating a realistic budget begins with tracking all income and expenditures. This helps to identify essential spending versus non-essential to make informed choices and adjustments.

Emergency savings should become a priority to prevent reliance on credit during unforeseen events. Setting small, achievable savings goals can make this process less daunting and more rewarding. They should focus on living within their means, prioritizing necessities, and making wise financial decisions.

Navigating the Bankruptcy Process

Filing for bankruptcy without money involves several critical steps.

Assessing Your Financial Situation

Before filing for bankruptcy, it’s essential to understand your financial picture. Gather documents such as credit reports, pay stubs, and bills. Creating a complete list of all assets, liabilities, and expenses will help identify which bankruptcy chapter applies.

Evaluate if Chapter 7 or Chapter 13 suits your needs or if options like debt settlement could work better. If you are located in New York and considering a business bankruptcy, consulting a Long Island Chapter 11 Bankruptcy Lawyer could be beneficial.

Seeking Legal Advice

Exploring free or low-cost legal assistance can aid those without funds for attorney fees. Numerous nonprofit organizations offer pro bono services. The American Bar Association and legal aid societies are excellent places to start.

This help is valuable in navigating complicated paperwork and legal procedures. Even one session with a skilled lawyer may prevent costly mistakes. Utilize online resources like forums or chat groups dedicated to bankruptcy for additional guidance.

Filing for Bankruptcy Without an Attorney

Filing bankruptcy pro se, or without legal representation, is challenging but doable. Begin by accessing bankruptcy forms from the U.S. Courts website and ensuring their accuracy. Making mistakes can delay or complicate the process.

List all debts and properties as per the requirements. Follow mandatory credit counselling courses. File the Petition, Schedules, and Statements with the local bankruptcy court and adhere to their specified procedures.

Post-Filing Procedures and Debt Discharge

After filing, several steps must be completed before discharging debts. A meeting of creditors, known as the 341 meeting, will be scheduled. During this meeting, the debtor must answer questions under oath concerning their financial affairs.

Alternatives to Bankruptcy

Individuals considering bankruptcy may explore debt settlement or credit counselling as viable choices. These alternatives can potentially reduce financial burdens while avoiding the ramifications of bankruptcy.

Debt Settlement and Negotiation

Debt settlement involves negotiating with creditors to reduce the total amount owed. This approach requires convincing creditors that partial payment is preferable to no payment. A successful negotiation may result in a significant debt reduction.

The process typically starts with contacting creditors directly or working with a debt settlement company. It’s important to be aware that using these companies may involve fees. Having a clear understanding of one’s financial situation and communicating effectively with creditors can lead to more fruitful negotiations.

Potential risks include impacts on credit scores and the possibility of creditor lawsuits. Hence, debt settlement should be carefully considered and ideally used when there’s the ability to offer lump-sum payments or when creditors indicate a willingness to negotiate.

Credit Counseling Services

Credit counselling services offer professional guidance on managing debt. Certified counsellors evaluate an individual’s financial situation, providing tailored advice to improve financial management. These services often include budgeting assistance, educational workshops, and, when necessary, debt management plans (DMPs).

Participants in a DMP agree to repay debts over time, often with reduced interest rates or waived fees. Regular payments are made to the credit counselling agency, which then distributes funds to creditors.

Selecting a reputable, nonprofit credit counselling service is crucial to avoid scams or excessive fees. Clients should look for agencies accredited by recognized bodies to ensure they receive reliable and ethical advice.

Choosing a Bankruptcy Attorney

Selecting the right bankruptcy attorney can significantly impact the process and outcome of filing for bankruptcy. A lawyer’s expertise and guidance can navigate the complexities of the legal system, ensuring that all necessary paperwork is filed correctly and on time.

Benefits of a Bankruptcy Lawyer

A bankruptcy lawyer provides invaluable support during a financially challenging time. They handle complex paperwork, offer advice on which type of bankruptcy to file, and protect assets within legal allowances. A lawyer can also negotiate with creditors on behalf of their clients, potentially easing financial stress.

Experience with courts and trustees is another crucial benefit. They understand procedural nuances that a layperson might overlook. Having someone familiar with local rules and requirements can be especially beneficial for those considering a Long Island Chapter 11 Bankruptcy Lawyer.

Finding the Right Fit

Finding the right bankruptcy attorney means looking for someone with significant experience and a good track record in handling bankruptcy cases. Reputation is essential; potential clients should seek reviews or testimonials from previous clients.

Cost is another vital consideration. Many lawyers offer free consultations where costs and payment plans, including credit card payments or waiving of upfront fees, can be discussed. Finding an attorney who communicates clearly and makes clients feel comfortable can also enhance the experience.

Local expertise, particularly for complex cases like Chapter 11, can be advantageous. Clients should ensure their lawyer is well-versed in local legal requirements and has experience in similar cases.

Important Considerations

Filing for bankruptcy can have serious implications on one’s financial future and interactions with creditors. It is crucial to understand the long-term effects and learn the best ways to manage communications with creditors during this process.

Long-Term Impacts of Bankruptcy

Bankruptcy significantly influences credit scores, often dropping them by 100 points or more. This can make securing loans or credit cards more challenging for up to seven to ten years, as it remains on the credit report within this timeframe.

Employers, landlords, and insurance companies may also view a bankruptcy filing negatively. It can affect job prospects, housing applications, and insurance rates.

Planning and budgeting become essential post-bankruptcy. Establishing a savings plan and building an emergency fund can help improve financial stability. Individuals should also consider seeking financial education resources to brighten their financial future.

Dealing with Creditors

Open communication with creditors can sometimes lead to beneficial arrangements, such as negotiating payment plans or settlements. Creditors may prefer this over the uncertainties of bankruptcy.

Written records of all interactions should be maintained, including emails and letters, to provide documentation if disputes arise. Understanding creditors’ rights and obligations is important, to avoid additional legal complications.

Seeking legal advice or assistance from a credit counsellor can offer guidance in handling persistent creditors. They can also educate on creditor practices and laws, ensuring individuals are informed and protected throughout the bankruptcy process.

Common Misconceptions

Bankruptcy is a subject surrounded by myths. One common belief is that filing for bankruptcy will leave the individual penniless. This is not true. Bankruptcy is meant to provide a fresh start, not complete destitution.

Another misconception is that it’s a quick process. In reality, it involves multiple steps, from completing paperwork to court hearings. The timeline can vary based on several factors.

People often think it will erase all debts. Not all debts are dischargeable. Student loans and certain taxes typically remain, and it’s important to understand the types of debt affected.

A widespread myth is that bankruptcy permanently ruins one’s credit. While it does affect credit scores, individuals can rebuild their credit over time with responsible financial habits and planning. Credit recovery is possible.

Many assume only reckless spenders file for bankruptcy. Financial struggles can arise from medical expenses, job loss, or unforeseen emergencies. Bankruptcy is often a practical solution for many different situations.

Finally, some believe hiring a lawyer is expensive and unnecessary. This is not always the case. Pro bono legal services or community resources can assist those without funds, ensuring guidance through the process.

Understanding these misconceptions helps individuals make informed decisions about bankruptcy without unnecessary fear or confusion.

Closing Thoughts

Filing for bankruptcy without money is challenging, yet it opens pathways to rebuild financial stability. An essential aspect is learning to maintain financial health to secure a brighter future.

Maintaining Financial Health

Regular budgeting and prudent spending are crucial steps. Individuals should create a detailed budget, prioritizing essential expenses to prevent accumulating new debt. Monitoring one’s credit score and addressing any discrepancies can significantly improve financial prospects.

Savings, even in small amounts, accumulate over time and offer a safety net for unforeseen expenses. Exploring opportunities for financial education can empower individuals to make informed decisions. Utilizing community resources, like free financial workshops and credit counselling, can provide valuable guidance and support on the path to financial recovery and stability.

The term ‘disabled persons trust’ is frequently used to describe any trust where a beneficiary is deemed vulnerable or disabled. It is not a specific type of trust.

A disabled persons trust can be any discretionary, interest-in-possession or absolute trust. The key is whether the beneficiary’s vulnerability qualifies the trust for income and capital gains tax (CGT) relief or if their disability qualifies the trust for special inheritance tax (IHT) treatment.

So, who qualifies as a vulnerable or disabled beneficiary?

Vulnerable only:

• A child under 18 where at least one parent has died – known as a ‘relevant minor’

Vulnerable and disabled:

• A person with a mental health condition covered by the Mental Health Act 1983
• A disabled person who is eligiblefor any of the following benefits (even if they’re not receiving them): adult disability payment; armed forces independence payment; attendance allowance; child disability payment; constant attendance allowance; disability living allowance (for adults or children); industrial injuries disablement benefit; personal independence payment.

Income tax and CGT relief

Trusts with a vulnerable beneficiary can make a ‘vulnerable beneficiary election’ with HM Revenue & Customs, allowing them to qualify for income tax and CGT relief.

Where the trust has a liability to income or CGT, they may be eligible for a deduction. This is calculated as follows:

1. Trustees calculate the trust’s tax liability – using the trust rates of tax and assuming no relief
2. Trustees then calculate the tax liability the vulnerable person would have on the same income/capital gains if taxed at their marginal rate.
3. The trustees claim the difference between these two figures as a deduction on their tax liability.

The relief only applies if it is the trust which is liable to the tax.  For example, a discretionary trust in receipt of interest and dividends. Absolute trusts place the income tax and capital gains liability on the beneficiary directly, so the relief is not necessary.

Higher CGT exemption

Trusts eligible for the vulnerable beneficiary election will have a higher CGT annual exempt amount. This is currently £3,000 (2024/25, usually £1,500), though this allowance may be reduced where the settlor has created multiple trusts.

Trusts which hold investment bonds

Bonds are taxed under chargeable event rules, chargeable gains are tax as income. Under these rules, the settlor of a discretionary or interest in possession trust is liable to income tax on gains arising during their lifetime or tax year of their death. The trustees only have a liability in the following tax years. Even then, the bond can be assigned directly to a beneficiary to be taxed at their marginal rate. Therefore, it may not be necessary for the trustees to make the vulnerable beneficiary election.

If the trust has multiple beneficiaries

If there are beneficiaries who do not qualify as vulnerable, the trustees must segregate assets held for them. The relief only applies for the portion of the trust fund held for the vulnerable beneficiary.

If there is more than one vulnerable beneficiary, the trustees must make an election for each.

Claiming the relief

Trustees must first submit a vulnerable beneficiary election form (VPE1) to HMRC. If there is more than one vulnerable beneficiary, one form must be submitted for each.

Trustees claim the income tax and CGT relief when submitting their annual self-assessment (SA900). Self-assessment must be completed by 31 January following the end of the tax year.

The relief ends on the death of the vulnerable beneficiary, or if they cease to qualify.

Calculating the relief can be complicated, so trustees should consider engaging an accountant. Example calculations are also available from HMRC.

Inheritance tax

A trust may receive special IHT treatment where one of the following applies:

• One or more beneficiary is disabled or has a condition which is expected to make them disabled.
• The trust is a ‘bereaved minors’ trust. This is where one or more of the beneficiary’s parents has died creating a trust in their will (or via the rules of intestacy) for their minor child.

The following special treatment is applied:

• A gift to a disabled persons trust is a potentially exempt transfer regardless of the type of trust used. This means there will be no 20% entry charge for exceeding the nil rate band.
• Trusts will not be subject to the 10-yearly periodic or exit charges.

Restrictions on the trust fund

To qualify, there are restrictions which must be followed:

• For trusts created before 8 April 2013, at least half of the payments from the trust must go to the disabled person during their lifetime.
• For trusts created on or after 8 April 2013, all payments must go to the disabled person. However, up to £3,000 per year (or 3% of the trust’s value, if lower) can be paid to other beneficiaries.
• Trusts of bereaved minors (trusts created by the will of the child’s parent) must pay all assets to the beneficiary on attaining age 18 or before.

While it is possible to use an ‘off the shelf’ draft trust deed, a settlor of a disabled persons trust may choose instead to instruct a legal adviser to draft a bespoke trust document which enforces these restrictions on the trustees.

On death of the beneficiary

Any part of the trust fund held for a disabled beneficiary is treated as part of their estate for the purposes of calculating their IHT liability.

Claiming the special treatment

There is no election or application required for the treatment to apply. However, trustees and settlors are advised to keep good records which can help them demonstrate that the special treatment applies if needed.

Means-tested benefits

A settlor looking to create a trust for a disabled or vulnerable person is likely to be keen not to disrupt any entitlement to means tested benefits. These are benefits where an individual’s capital and income are used to assess whether they are entitled to a benefit and how much they might receive.

Bare trust

Any assets held in a bare trust will be considered for any means-tested benefits the beneficiary claims. This is because the beneficiary has a vested right in the trust fund. There is one notable exception to this; capital and income are excluded from means testing if the trust settled with the award of a personal injury claim for the beneficiary of the trust. The trust must be settled within 12 months of the award.

Discretionary trust

Any assets held within a discretionary trust are not usually considered for means tested benefits as no beneficiary has a vested right in the trust fund. However, any capital or income paid to the beneficiary will be considered in the assessment.

In either case, the position is unchanged if a beneficiary qualifies as a vulnerable or disabled person.

 Trust registration

Trusts for disabled beneficiaries or bereaved minors are exempted from registration during the lifetime of the disabled beneficiary. If the trust ceases to qualify for special treatment the trustees must register the trust within 90 days.

Disabled persons trusts:

*Rate applicable to trusts: Income Tax 39.35% (dividend) 45% (all other income). 0% on all income if below £500. Capital Gains 20% annual exempt amount up to £1,500) 2024/25

**Assuming the trust fund is applied for the vulnerable beneficiary.

Rachael Griffin is a tax and financial planning expert at Quilter

OVER a quarter of a million households have had their benefit payments stopped after failing to act on a key deadline.

New government figures show 318,834 (up from 284,660 reported in August) benefits claimants have lost out by not moving to Universal Credit within an important three-month window.

Two million people on legacy benefits are gradually moving to Universal Credit under a process known as managed migration.

Universal Credit was set up to replace legacy benefits and kicked off in November 2022 after a successful pilot in July 2019.

As part of the process, eligible households on legacy benefits, including tax credits, are sent “migration notices” in the post which tell them how to make the move to Universal Credit as it’s not automatic.

Households must apply for Universal Credit within three months of receiving their managed migration letter.

Failing to do this can result in benefits being stopped.

Between July 2022 and September 30, 2024, the Department for Work and Pensions (DWP) sent almost 1.4 million migration notices.

However, according to the DWP’s latest figures, 318,834 individuals lost their benefits after failing to act on migration notices received between July 2022 and June 2024.

Some 883,944 individuals have since made successful claims for Universal Credit, and another 166,594 are still in the process of transitioning.

Ayla Ozmen, director of policy and campaigns at Z2K, said: “We’re concerned to see that more people have had vital benefit payments stopped as part of the government’s plan to move people on to Universal Credit.

“The government now looks to have moved all disabled people on to Universal Credit by March 2026, and we are worried that more people may miss the deadline and have their benefits stopped, with potentially disastrous results.

“The government needs to ensure that appropriate safeguards are put in place to stop disabled people being left with nothing to live on.”

Experts have previously warned that managed migration poses a risk to vulnerable people who face losing money.

Top bosses at charities, including Mind, The Trussell Trust, Turn2Us and the Money and Mental Health Policy Institute, said in 2022 that around 700,000 with mental health problems, learning disabilities, and dementia could struggle to engage with the process.

More than 20 organisations have called on the government to halt managed migration to fix flaws in the system that could cause those at risk to fall through.

MANAGED MIGRATION PROGRESS

In January, the government announced the number of migration notices it plans to send out in the coming financial year.

Before this date, the focus was sending migration notices to households claiming tax credits only.

However, 110,000 income support claimants and a further 120,000 claiming tax credits with housing benefit started receiving their letters in April.

Over 100,000 housing benefit-only claimants were contacted in June.

More than 90,000 people claiming employment and support allowance (ESA) along with child tax credits started being asked to switch in July.

Meanwhile, 20,000 claimants on jobseekers allowance (JSA) were contacted in September.

The Sun previously reported that, in August, those claiming tax credits who are over state pension age will be asked to apply for either Universal Credit or pension credit.

It was initially planned that those claiming income-related ESA alone would not be moved until 2028.

However, the DWP brought forward plans to move these households to Universal Credit by the end of 2025.

Since September 2024, 800,000 households have begun receiving letters explaining how to move from ESA to Universal Credit.

HELP CLAIMING UNIVERSAL CREDIT

As well as benefit calculators, anyone moving from tax credits to Universal Credit can find help in a number of ways.

You can visit your local Jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.

There’s also a free service called Help to Claim from Citizen’s Advice:

• England: 0800 144 8 444
• Scotland: 0800 023 2581
• Wales: 08000 241 220

You can also get help online from advisers at citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.