LISA and Universal Credit

I believe that I have inadvertently and with the best intentions put my niece in a very difficult situation.
When my Mother was alive she wanted to gift money from excess income to her grandchildren. She didnt want them to have access to it until later in life and so with my advice we set about opening pension accounts for them all with Hargreaves Lansdown. (SIPPs)

The state pension age was getting higher and higher, so that when it came to my nieces turn for an account I decided a better choice for her was a LISA as this gave the option of taking a pension at age 60.
I gave her £100 in Feb 2018 to set up the account.I told her it was for her pension and money would be put in from time to time to help her later in life. All susequent money has been paid in via my account as Hargreaves Lansdown operate a "linked accounts" system. She had no idea of how much was in the account. We kept her in the dark deliberately.
We have made some good investment decisions and the account now has £30k plus in it.
She has just informed me that having this account could affect her eligibility to benefits and has recieved notification from DWP to that effect. I had told her that she didnt have access to the money. But she actually did although she would loose 25%.
Reading thru the literature on "savings" It doesnt
look to good. She could loose money and her elegibilty to benefits. It seems unfair.
We are hoping there is some way round this?

Professional benefits.

Hi, how frustrating and worrying! We have had slightly similar considerations in our family. If the benefits recipient gets higher rate DLA or Enhanced PIP, broadly, they can be considered 'vulnerable'. This allows setting up of a Discretionary Trust in your Will for when you die. I do not know if there is a while-you-are-alive version, but if so it would perhaps offer a solution if it is not too late to move the funds. Your niece would need to be sure to avoid 'intentional deprivation of capital' catches. What applies if she is only unemployed but not vulnerable, apart from the deprivation of capital, I don't know. Looking up these things if you didn't know about them already may help you understand the sort of things an adviser might talk about, so I hope it's of a little help. Denby