Giving money away while on UC

ron19581970

Hi

Asking for a friend as she has no online access. My friend is in a position where she has to sell her house because of a marriage split. The house was to be left to her 3 sons but because of the split her ex hubbie has forced the sell of the house. She wants to give her half of the sale proceeds to her 3 sons ,we reckon around the £25,000 mark between them ,but has been told by UC that it may affect her benefit. She gets the disability part of UC and housing benefit paid by UC. Basically they say that if she has gained capital and gives it away ,or pays debts with it , thers a chance it could affect her UC in the future. Anyone had any expierence with this or be able to elaborate on it. The money was to be for the 3 sons eventually but because of circumstances the house is being sold and she finds herself in a position where if she does give the money away it will affect her UC and if she keeps it for herself it will affect her UC. She is still adamant that the 3 sons get the money from her half of the house as that was the main reason she bought it in the first place ,so the sons would have something. Is there any way she can gift the money to them without affecting her UC.

Thanks

poppy123456

Hi,

Once she receives the money then she will need to report those changes and all of her UC will stop because she'll have savings or more than £16,000.

If she gives the money away then this is classed as deprivation of capital and she'll still be classed as having the money and her benefits will still stop.

Hart86

Just to add; paying off debts is NOT deprivation of capital so she can use the money for that. 
Once under 16K she would start getting universal credit again but it would be reduced by £4.35 for every £250 she has over £6000.

Chloe_Scope

Hi @ron19581970 and a warm welcome to the community! Thank you @poppy123456 for answering this. If you need anymore information @ron19581970 then please do let us know

ron19581970

So Hart86, if she owed her sons money and paid them from her proceeds, then it would not be deprivation of capital as its a debt owed?

poppy123456

Hart86 said:

Just to add; paying off debts is NOT deprivation of capital so she can use the money for that. 
Once under 16K she would start getting universal credit again but it would be reduced by £4.35 for every £250 she has over £6000.

Sorry but i disagree. It depends what debts are owed. If there's a court order demanding payment then yes the debts can be paid, otherwise paying off debts can be seen as deprivation of capital.

Paying off any debt to family members could very likely be seen as deprivation of capital.

poppy123456

https://www.entitledto.co.uk/help/Deprivation-of-savings-and-other-capital-Universal-Credit

poppy123456

Also this was taken from this link. http://www.safeadvice.org.uk/main/notcap.php

Priority debts or debts attracting high rates of interest may be acceptable to clear - but not necessarily debts (such as a mortgage, money owed to family members or possibly credit cards) which are not immediately due. If someone releases equity in their property, to pay off non-priority debts, this may be treated as notional capital. However, for UC claimants and for people of pension credit age or over, the claimant is not treated as having deprived themselves of capital if they pay off or reduce a debt or pay for goods or services, which were reasonable in their circumstances.

Hart86

I should probably have been more specific, thank you @poppy123456!!

Unfortunately @ron19581970 while debts to family can count, it has to be evidenced and is very hard to prove, they would need to be debts that the person is legally liable for, the type that go through the courts and records of repayment schedules and evidence of initial loan / debt would need to be available.

Home equity investment is fine but paying a years rent up front (for example) is not, because it’s not owed yet. 

Hope that clarifies things a little!!