Inherit property - lose benefits

steve111 · 7 December 2017 at 4:37AM

My mother was sadly diagnosed as terminally ill with cancer two weeks ago. She will have a few weeks perhaps couple of months to live from what the doctor said. She has a will which includes my late brother who died last year unexpectedly. My sister and I are the only beneficiaries now. I am currently the only Executor. We will book the solicitor to visit next week to amend the will.

Currently my sister would inherit Mum's house solely and 25 + 12.5% = 37.5% of the residue. We agreed we would change the will so that my sister also becomes an Executor (though she wouldn't be very competent with doing the role on her own.) Also the residue would be split differently. The house is worth around £100k and Mum has £102k in her bank account - no other significant assets. So both being approximately equal we thought we'd give my sister the house plus a small portion to refurbish it. The house needs £10k or so to refurb bathroom and kitchen and decorate. So the new split of the residue would be 80% to me and 20% to sister.

My sister and I live in the family home and I'm living on savings at the moment. Sister hasn't worked for five years or so and with her lack of work skills might not for some time. So she gets JSA benefit. We know she'd lose this until her savings fell to less than £16k allowing for reasonable regular outgoings. But a friend said that, as she would be a home owner, she would lose all benefits including even Council Tax Benefit... So she would have to sell the house in order to realise some money to live on. Is this true? She then mentioned to me that she wouldn't want to live here after Mum's death anyway...

I think it might be better for me to get the house - I usually work so I wouldn't lose any benefits. The house could at least be of use to me even if it were rented out. Sister wouldn't want to manage a rented property. She could have the 80% of the residue instead of me ie switch the split... But understandably she doesn't want to discuss the changing of the will right now as she gets very anxious generally and especially so at the moment. What do people think? I'm not sure what the best way to split the estate would be. But it would seem a shame to lose an asset which could be rented out to provide some income to either me or perhaps both of us? Perhaps we should get 50% each of both the house and residue? Perhaps I could rent out the house and split the rental,income 50/50 between us?

steve111 · 7 December 2017 at 4:54AM

I should add that I hope I don't come across as self-serving in the above. It's a very stressful time at the moment for all three of us. Though I and my sister are in our 50s she's never left the family home - a small terrace much in need of refurbishing. I normally live and work 200 miles away. But when our brother took his own life at 43 years old last year I moved up to support them through the grief and practical stuff. He used to do all that for them both. I am able to do this as I'm currently single and Mum's good pensions cover all the living expenses.

Robin9 · 7 December 2017 at 4:54AM

Where would you live ?

steve111 · 7 December 2017 at 5:24AM

I might move back down to the city I lived in (and like) for the past 19 years until this July. I left home in 1979 to go to University and have always lived some distance away visiting the family once a year or so. This is why I'm finding it more of a strain as I don't know anyone but Mum and sister here. And it just feels a bit weird living somewhere I left all those years ago. I said this summer I would move up temporarily with the expectation of using Mum's home as a base but doing some travelling. That was before she was diagnosed of course. I can find work there without too much stress and then rent a flat or share with friends. Though my sister said somewhat disconcertingly that she'd "have to live within an hour of where I lived". I'm not sure sharing a house with her would be suitable for me though she suggested it as a possibility. She is feeling very anxious at the moment.

Jenniefour · 7 December 2017 at 9:44AM

I'm not sure why you think you need to change the will, and whether your mother wants to do that. Providing your brother does not have any children then you and your sister can vary the will by a DOV later, providing you are both in agreement. It sounds like a very stressful time for both of you, and sorry your mother is so unwell.

Margot123 · 7 December 2017 at 10:03AM

I'm sorry for the stress you are going through, and it seems quite normal for you to want to plan ahead for when your Mum passes.

Having been in a similar situation and with the benefit of hindsight, I would suggest you concentrate on the here and now. Looking too far ahead only adds to your anxiety, although you may think right now you are being practical and it is helping. It will be at a later date that everything hits you and you regret spending the time on things other than your family.

Having said all that, I'm pretty sure that owning a home will not affect benefits. The Govt will look upon it as saving the country money on such costs as housing benefit etc.
This website might be of help: https://www.entitledto.co.uk

Keep_pedalling · 7 December 2017 at 10:20AM

Jenniefour wrote: »

I'm not sure why you think you need to change the will, and whether your mother wants to do that. Providing your brother does not have any children then you and your sister can vary the will by a DOV later, providing you are both in agreement. It sounds like a very stressful time for both of you, and sorry your mother is so unwell.

Using a DoV to avoid loss of benefits will not work as it would be classed as deliberate deprivation of assets.

The sister inheriting the house it would not effect her benefits, and she would not be forced to sell as it is and would continue to be her home.

steve111 · 7 December 2017 at 3:19PM

Jenniefour, to clarify the above our brother died last year. That leaves mum, me and my sister occupying the family home now. What is a dov? I'm pretty sure owning property would affect someone's benefits drastically. Mum is happy with whatever my sister and I agree, we are the only beneficiaries.

IAmWales · 7 December 2017 at 3:26PM

Deed of variation.

Is your sister disabled, is there another reason she is out of work?

If your sister lives in the property it will not affect her benefits. Having savings will affect her benefits.

Perhaps a time off benefits will give her an opportunity to review what she wants to do with her future?

thorsoak · 7 December 2017 at 3:30PM

Inheriting the house would not preclude your sister from receiving benefits - she would be entitled to the 25% council tax reduction for a start. Her housing benefit would drop in so far as she would not be paying rent but she would still be entitled to receive benefits. They would change - but as has already been suggested, look at the turn2us website.

phillw · 7 December 2017 at 4:55PM

steve111 wrote: »

So she would have to sell the house in order to realise some money to live on. Is this true?

If you inherited a 12 bedroom multi million pound mansion then they would probably say that you should sell it. Inheriting a 100k property that you already actually live in should make no difference. Especially as it's from a parent.

It might be an idea to put the money and property into a trust. The trustees could then sell the house and buy another one and do it up for one or both of you to live in. They then can't tell you to sell it, because you don't own it. It shouldn't be deprivation of capital either as you never had it to be deprived of it.

You need advice though. The first question I would ask is if there was a way the trust could charge a small rent to cover maintenance, which could be claimed for from housing benefit.

Inherit property - lose benefits

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