Income support/getting money from sale of house?

Jummy · 24 January 2006 at 7:03PM

Hello!:)
I'm asking this question for a friend who is getting herself all worked up over her problem. I'm hoping i can get her some help from you guys.
My friend is recently divorced and is in temporary accomodation from local council after her house was repossessed during the divorce.
She is on Income support and has 2 young children.
Her ex husband has now told her that the old home has been sold and she will be getting money from the sale of the house.
He has told her it will be anything around 10,000.00.
She knows she will have to stop claiming IS HB etc.
But how long is the money expected to last her and what can she spend the money on.
She is being rehoused soon and i presume she can use the money to furnish her new home.
So is it a case of she has to spend all the money and then she can go back to claiming IS again?
Any info gratefully received.
Thanks

donnalove · 24 January 2006 at 7:42PM

she will have to use her money to live on unfortunatly, at least until it goes down.
if she was to spend say £2000 to furnish new house she could still claim income support but it would be reduced by £1 for every £250 over £3000 up to £8000.

if she did spend the money on furnishings etc then she must keep all recipts as they will check with a fine toothcomb where the money went.

hope this helps in some way.

Ted_Hutchinson · 24 January 2006 at 8:41PM

If the claimant was intending to use this £10000 as the deposit for a new house purchase and had the prospect of such a purchase underway then there is the chance that the money could be ignored for 26 weeks.
From Decison Makers Guide

29535 Money from the sale of premises which were lived in as the home is disregarded to give a person time to buy other premises if the person is going to
1. use the money to buy premises and
2. live in those premises as the home.
The period of disregard is 26 weeks or longer if it is reasonable from the date of sale
The money
29536 Money includes a payment made to a tenant or lessee by a landlord to buy back a tenancy or lease1.
Applying the disregard
29537 For the disregard to apply people should show
1. they intend to use the money to buy premises to live in as the home and
2. it is reasonably certain that they will in fact do so within 26 weeks or longer if it is reasonable from the sale of premises which were lived in as the home.

Example
Nigel receives £50,000 from the sale of his previous home. He moves to another area and claims JSA(IB). He states that he intends to use the £50,000 to buy a new house but he didn’t want to do so straightaway in case he did not like the new area.
The DM decides that the disregard does not apply because it is not reasonably certain that Nigel will use the money to buy another home within 26 weeks or any extended period.
29538 Evidence of an intention to use money to buy premises to live in as the home may include a
1. binding agreement to buy premises or
2. firm agreement from which a person would not be expected to withdraw, such as one which is subject to contract.
Money does not include payment from the sale of premises which
1. were bought with money from the sale of the previous home and those
premises have not been lived in as the home or
2. a person was not the beneficial owner of at the time of sale.
Example 1
Rozma sells her home and moves into a rented flat. She uses the money from the sale of her home to buy a holiday home. She uses that home just for holidays. The money she gets when she sells the holiday home is not disregarded.
Example 2
The executors of Norma’s estate sell her home. Norma’s daughter Juliet inherits the money from the sale. The disregard does not apply because Juliet is not the beneficial owner of the house when it is sold; even if the house was Juliet’s home.
29540 If the premises sold include a part which was not lived in as the home, such as a business with living accommodation, the disregard does not apply to the money from the sale of that part. The DM will need to get expert advice if the DM cannot work out how much of the money from the sale is for the part which was lived in as the home Separate guidance sets out those cases where DMs may require such expert advice.

29541 The disregard does not apply to any money which a person
1. gets from selling the home and
2. is not going to use to buy another home.
Example
A man and wife are going to buy another home using £60,000 of the £100,000 they got from selling their previous home. The disregard does not apply to £40,000 because it is not going to be used to buy another home. It does apply to £60,000.

Ted_Hutchinson · 24 January 2006 at 9:00PM

Capital
upper limit Now16000.00 From April 16000.00
amount disregarded 3000.00 from APRIL 6000.00
upper limit (clmt/ptner 60 or over) 16000.00 16000.00
upper limit (PC guarantee) from Oct 2003 No limit No limit
amount disregarded (clmt/ptner 60 or over) 6000.00 6000.00
child disregard 3000.00 3000.00
upper limit of RC/NH 16000.00 16000.00
amt disregarded of RC/NH 10000.00 10000.00
Tariff income
£1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit

You will see that if the entitlement to this money could be delayed until April this would make things a bit easier as the lower Capital amount before it gets affected by the reductions of £1 a week for each £250 gets doubled to £6000

Goods and Chattels are not regarded as capital so if the partner transferred ownership of a car as part of the £10000 amount so she received in April only £6000 and a car valued at £4000 and she had have any say in the purchase and wouldn't have disposed of capital with the intention of benefiting from the means tested benefit system.

The partner may also not be aware that the Capital Children own is not usually counted. But it may be worth discussing these matters with an experienced Welfare Rights professional.

creditcardking_2 · 25 January 2006 at 10:14PM

Would it not be better for him to give the 10k to someone else that you trust. Then its not really yours, so you would still be entitled to benefits, or pay someone back that you owe 10k too. Or just say that you spent it and leave it under the bed.

Joopin · 26 January 2006 at 12:05AM

Even if you spend it then you can be classed as having notional capital and be treated as if you still have it. Be VERY careful. As said if used for a deposit on a house it will be ok but buying stuff to furnish the house could be a problem.
Basically if you spend the money in order to claim benefits then you will be classed as having notional capital. Even if this is not your primary reason. eg you used the money to pay off a debt in order to reduce your monthly ut goings.

Income support/getting money from sale of house?

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