Benefit stops & Spending an inheritence

shelleypt

Hi my name is shelleypt

I'm currently in receipt of ESA contribution PIP housing & council tax benefits.
I'm due to receive an inheritance I understand I will lose housing & council benefit until this money reaches (£16000 tapered) £6000, is this correct?

What am I able to spend the money on so I do not fall foul of any regulations stating I wasted the money?  I need a few items for my disability needs (chair & new flooring capable to support wheelchair use for example) & would like to give my 2 children a small amount.

Thank you for any help you can give. The internet us a wonderful thing but sometimes finding out specific information can be difficult & I'm reluctant to contact DWP for advice as they always ask for personal information,  I've had problem is this past where they stopped benefits when contacting them for advice very wary of doing so over this especially as it could be months before I receive any money.

Regards Shelley

Alex_Alumni

Hello and welcome @shelleypt and thanks for taking the time to reach out today

I know that your PIP will not be impacted by the inheritance, as PIP is not means tested. Your Housing Benefit and Council Tax Support will be impacted if your savings are between £6,000 and £16,000. If they are more than £16,000, you will no longer be eligible for these benefits:

Saving limits- please see the Scope Website for more information

The DWP sets a limit of £16,000 in savings to be eligible for:

• Universal Credit

• Income-based JSA

• Income-related ESA

• Income Support

• Housing Benefit if you’re under State Pension age

If your savings are:

• under £6,000, your benefit claim is not affected by your savings

• between £6,000 and £16,000, you lose some of your benefit payment

• more than £16,000, you’re not eligible

It's important to bear in mind that the rules for Housing Benefit are different if you’re over State Pension age. You can have up to £10,000 in savings before it affects your claim. Every £500 over that amount counts as £1 of weekly income.

If you get Pension Credit guarantee credit, you can have more than £16,000 in savings without it affecting your claim.

If you claim Housing Benefit jointly with someone who is below State Pension age, the working age savings limit of £6,000 applies before it affects your claim.

I hope this helps answer some of your questions and makes sense, but do let us know if you feel we can support you further.

Alex

calcotti

shelleypt said:

What am I able to spend the money on so I do not fall foul of any regulations stating I wasted the money?  I need a few items for my disability needs (chair & new flooring capable to support wheelchair use for example) & would like to give my 2 children a small amount.

Buying things you need, replacing things etc will be fine. Gifting money to children may fall foul of deprivation of capital rules - it depends what you mean by small. A birthday gift of £50 is probably fine, a gift of several £1000s will almost certainly fall foul. Unfortunately there is no definite answer because each case is decided by a Decision Maker.

shelleypt said:

I'm currently in receipt of ESA contribution 

Any contribution based ESA is unaffected, any income based ESA will stop.

When you come to reclaim you will not be able to claim Housing benefit. If you want help with rent you will need to claim UC.

shelleypt

Thank you. Thats helpful.

Regards Shelley

L_Volunteer

You are welcome @shelleypt. I am glad to hear you found it helpful. If we can do anything else to support you, please don't hesitate to give us a shout. We are all here for you 

racyguy

shelleypt said:

Hi my name is shelleypt

I'm currently in receipt of ESA contribution PIP housing & council tax benefits.
I'm due to receive an inheritance I understand I will lose housing & council benefit until this money reaches (£16000 tapered) £6000, is this correct?

What am I able to spend the money on so I do not fall foul of any regulations stating I wasted the money?  I need a few items for my disability needs (chair & new flooring capable to support wheelchair use for example) & would like to give my 2 children a small amount.

Thank you for any help you can give. The internet us a wonderful thing but sometimes finding out specific information can be difficult & I'm reluctant to contact DWP for advice as they always ask for personal information,  I've had problem is this past where they stopped benefits when contacting them for advice very wary of doing so over this especially as it could be months before I receive any money.

Regards Shelley

Have you not considered living off the inheritance entirely and then putting all of your income either in a Discretionary Trust or even gifting away each week/month to the children?
The DWP cannot claim that you have deliberately given your money away as it was income and not capital? 
Get your personal capital to below £16,000 then reclaim your benefits.

Tori_Scope

As calcotti explained in a comment above, @shelleypt would need to be careful to make sure that what they're doing doesn't fall under deprivation of capital @racyguy. This could include giving money to the children, as calcotti explained. Does that make sense?

calcotti

racyguy said: The DWP cannot claim that you have deliberately given your money away as it was income and not capital? 

An inheritance is capital.

In any case any income received becomes capital if the income hasn't been spent in the period the income was paid for.

racyguy

woodbine said:

racyguy said:

shelleypt said:

Hi my name is shelleypt

I'm currently in receipt of ESA contribution PIP housing & council tax benefits.
I'm due to receive an inheritance I understand I will lose housing & council benefit until this money reaches (£16000 tapered) £6000, is this correct?

What am I able to spend the money on so I do not fall foul of any regulations stating I wasted the money?  I need a few items for my disability needs (chair & new flooring capable to support wheelchair use for example) & would like to give my 2 children a small amount.

Thank you for any help you can give. The internet us a wonderful thing but sometimes finding out specific information can be difficult & I'm reluctant to contact DWP for advice as they always ask for personal information,  I've had problem is this past where they stopped benefits when contacting them for advice very wary of doing so over this especially as it could be months before I receive any money.

Regards Shelley

Have you not considered living off the inheritance entirely and then putting all of your income either in a Discretionary Trust or even gifting away each week/month to the children?
The DWP cannot claim that you have deliberately given your money away as it was income and not capital? 
Get your personal capital to below £16,000 then reclaim your benefits.

Not the best of advice I'm afraid, why on earth would someone want to give up the benefits they would still be entitled to after they receive the inheritance?
We should all be careful to consider the "advice" we give carefully.

They would certainly continue to claim the non means tested ones. The idea is to not spend any income but give it away of put it into that type of trust. They would then live off the capital (inheritance) paying bills, living costs and capital costs. The 'lost' income is still there or with the children. The idea is to bring the inheritance capital down to below £16,000 so as to reclaim the means tested benefits. Deprivation does not apply to income in this way. If a Trust was used it would have all of the unspent benefit income in it and it cannot be treated as capital because technically it no longer exists as it was given away.

Go see an experienced Welfare Rights Officer.

calcotti

Putting money into a trust after receiving it will likely be deprivation of capital. The time to set up trusts is when drawing up the will before inheritance occurs

racyguy

calcotti said:

Putting money into a trust after receiving it will likely be deprivation of capital. The time to set up trusts is when drawing up the will before inheritance occurs

Yes it will be if you put the inheritance in one.
What I was saying is to spend the inheritance on all of the living costs and put the income (benefits, income, State Pensions etc ) into the trust. They cannot say that giving away your weekly/monthly income is deprivation.
When the inheritance gets below £16,000 you can reclaim the lost means tested benefits.

Girl_No1

racyguy said:

calcotti said:

Putting money into a trust after receiving it will likely be deprivation of capital. The time to set up trusts is when drawing up the will before inheritance occurs

Yes it will be if you put the inheritance in one.
What I was saying is to spend the inheritance on all of the living costs and put the income (benefits, income, State Pensions etc ) into the trust. They cannot say that giving away your weekly/monthly income is deprivation.
When the inheritance gets below £16,000 you can reclaim the lost means tested benefits.

Do you believe Decision Makers are really that naive? 

They will see X amount of inheritance being rattled through in Y number of months/years and question how that amount of money plus income could have been legitimately used. 

They will smell deprivation of capital a mile away and, to be frank, if they don't they're not doing their job properly.

racyguy

Girl_No1 said:

racyguy said:

calcotti said:

Putting money into a trust after receiving it will likely be deprivation of capital. The time to set up trusts is when drawing up the will before inheritance occurs

Yes it will be if you put the inheritance in one.
What I was saying is to spend the inheritance on all of the living costs and put the income (benefits, income, State Pensions etc ) into the trust. They cannot say that giving away your weekly/monthly income is deprivation.
When the inheritance gets below £16,000 you can reclaim the lost means tested benefits.

Do you believe Decision Makers are really that naive? 

They will see X amount of inheritance being rattled through in Y number of months/years and question how that amount of money plus income could have been legitimately used. 

They will smell deprivation of capital a mile away and, to be frank, if they don't they're not doing their job properly.

They cannot question what you do with your income. You could just set fire to it or hand it all to a guy who is sleeping on the streets.
They could question how you are spending the capital (inheritance) but just as long as you aren't silly about spending it on expensive holidays or car then they just have to accept it.

If you are renting and the inheritance is enough to buy a home then they cannot stop that happening. You will have then converted the capital into exempt capital. They cannot use the value of the home you live in for benefit purposes.

This is a quirk of the deprivation rules - they only apply to capital held. The only time they come into play with income is if you intentionally refuse to claim a benefit or  pension in order to increase the level of benefits being paid. 

Girl_No1

racyguy said:

Girl_No1 said:

racyguy said:

calcotti said:

Putting money into a trust after receiving it will likely be deprivation of capital. The time to set up trusts is when drawing up the will before inheritance occurs

Yes it will be if you put the inheritance in one.
What I was saying is to spend the inheritance on all of the living costs and put the income (benefits, income, State Pensions etc ) into the trust. They cannot say that giving away your weekly/monthly income is deprivation.
When the inheritance gets below £16,000 you can reclaim the lost means tested benefits.

Do you believe Decision Makers are really that naive? 

They will see X amount of inheritance being rattled through in Y number of months/years and question how that amount of money plus income could have been legitimately used. 

They will smell deprivation of capital a mile away and, to be frank, if they don't they're not doing their job properly.

They cannot question what you do with your income. You could just set fire to it or hand it all to a guy who is sleeping on the streets.
They could question how you are spending the capital (inheritance) but just as long as you aren't silly about spending it on expensive holidays or car then they just have to accept it.

If you are renting and the inheritance is enough to buy a home then they cannot stop that happening. You will have then converted the capital into exempt capital. They cannot use the value of the home you live in for benefit purposes.

This is a quirk of the deprivation rules - they only apply to capital held. The only time they come into play with income is if you intentionally refuse to claim a benefit or  pension in order to increase the level of benefits being paid. 

I agree they cannot question someone buying a house to live in from capital gained from inheritance.  In fact, they'd be delighted as there would no longer be rent to be paid by DWP/taxpayer.  

The rest of your "cunning plan" is, imo, nonsense and anyone attempting it would be foolish in the extreme.

racyguy

Girl_No1 said

I agree they cannot question someone buying a house to live in from capital gained from inheritance.  In fact, they'd be delighted as there would no longer be rent to be paid by DWP/taxpayer.  

The rest of your "cunning plan" is, imo, nonsense and anyone attempting it would be foolish in the extreme.

if you say so.

machy54321

this is an absolute joke! Why should you have to tell uc about anything you receive over £16K, 16K means you close your claim as you’re not entitled to uc anymore, the remainder of inheritance should be nothing to do with uc, it’s your money, I think it’s a bloody cheek that these people can still control your life after youve come off benefits, what you decide to spend YOUR money on should have the same freedoms as anyone else that doesn’t claim benefits!!

anisty

This is a very old thread. Yes, if your claim is closed at 16k and you never claim again, no problem. Spend or save as you wish.

DWP will only become interested if you claim again in future. Which is fair enough really. If you win 50k on the lottery and live it up for 6 months, dispensing of your full win that does become a concern if you're straight back on UC again supported by tax payers who have not blown 50k in a short space of time.

DWP does expect large sums of capital to last a long time. If you spend the lot and claim again fast, you fall foul of deprivation of capital rules.

Ranald

https://forum.scope.org.uk/discussion/comment/1006091#Comment_1006091

So you would expect state support in record time, just after receiving a windfall? Nice.

machy54321

Hi Ronald, I expected this kind of comment. I’ve worked for 46 years and paid tax and Nat ins all my life, (13 years over the qualifying period for a full state pension), and I receive pip due to health conditions, This would not matter to me if I was able to work, and the state pension age has meant my birth year is included in the increase of pensionable age to 67 instead of 66! So YES I expect it, people who have not paid enough Nat ins will receive pension credit and be entitled to all sorts of other benefits, so why should I be penalised for receiving money my parents already paid tax on! Ronald I won’t bring myself down to your level and tell you what I think of people like you who decide to make ill informed uneducated comments, But I absolutely deserve to be able to reclaim benefits after I have spent MY money on whatever the hell I want to!

Ranald

https://forum.scope.org.uk/discussion/comment/1006211#Comment_1006211

You spent your life paying for your parent's generation's pension, you didn't mention any of that in your initial post, and it's 'Ranald'.

machy54321

Apologies Ranald, and yes I worked from 15 years of age up to 62 when I could no longer work, I am 63 now and still have almost 4 years until I can receive state pension.