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  • FIRST POST
    MrOJones
    Inheritance affecting benefits
    • #1
    • 13th Oct 08, 10:47 PM
    Inheritance affecting benefits 13th Oct 08 at 10:47 PM
    My sister is about to inherit £15K from the death of a grand parent and is a now a single mother with four children. She receives state benefits for herself and the children.

    The question is: If she pays the inheritance into her bank account will she lose those benefits until the £15K runs out?

    If so is there a 'legal' way to aviod her losing her benefits and keeping this money as a future for the children? I.e. for example, through a trust with me (or someone else) as an executor?

    The cheque will have to made out to her I expect as she is named in the will but there must be a way to aviod her losing her benefits?

    Thank you.
Page 1
    • woodbine
    • By woodbine 13th Oct 08, 11:25 PM
    • 17,958 Posts
    • 23,997 Thanks
    woodbine
    • #2
    • 13th Oct 08, 11:25 PM
    • #2
    • 13th Oct 08, 11:25 PM
    My sister is about to inherit £15K from the death of a grand parent and is a now a single mother with four children. She receives state benefits for herself and the children.

    The question is: If she pays the inheritance into her bank account will she lose those benefits until the £15K runs out?

    If so is there a 'legal' way to aviod her losing her benefits and keeping this money as a future for the children? I.e. for example, through a trust with me (or someone else) as an executor?

    The cheque will have to made out to her I expect as she is named in the will but there must be a way to aviod her losing her benefits?

    Thank you.
    Originally posted by MrOJones
    First of all there is NO legal way to avoid getting this money,it has been left to her and hers it is,even if she put it in trust for her children i suspect the dwp would consider that deprivation of capital(in other words she would be treated as though she still had the money.
    Secondly:for means tested benefits i.e. income support,council tax and housing benefit,having less than £6000 doesnt affected these benefits for every £250 over 6k they are reduced by £1,over £16k and they all stop completely
    So in answer to your question there is no way to avoid her losing her benefits,she will lose some of them until she has less than £6k,but again remember the deprivation of capital rules which mean she wont be able to go out and blow the lot on a world cruise !And remember that breaking the rules is fraud which can lead to a criminal record
    --------the all new improved woody------
  • zzzLazyDaisy
    • #3
    • 13th Oct 08, 11:30 PM
    • #3
    • 13th Oct 08, 11:30 PM
    There is a way of avoiding getting this money. That is by making a Deed of Variation renouncing her inheritance.

    But the fact is that this money could be used to make her life and her children's life better. She may need a new car, new furniture, a family holiday (not a round the world cruise!), a new kitchen. These things would not be viewed as intentional deprivation of capital.
    • woodbine
    • By woodbine 13th Oct 08, 11:43 PM
    • 17,958 Posts
    • 23,997 Thanks
    woodbine
    • #4
    • 13th Oct 08, 11:43 PM
    • #4
    • 13th Oct 08, 11:43 PM
    There is a way of avoiding getting this money. That is by making a Deed of Variation renouncing her inheritance.

    But the fact is that this money could be used to make her life and her children's life better. She may need a new car, new furniture, a family holiday (not a round the world cruise!), a new kitchen. These things would not be viewed as intentional deprivation of capital.
    Originally posted by zzzLazyDaisy
    We could argue long into the night about deprivation of capital,the truth of the matter being that different DMs have different ideas about the rules,so my advice was more of a general nature,in matters like this I would perhaps advise written contact with the OP benefits office
    --------the all new improved woody------
  • zzzLazyDaisy
    • #5
    • 13th Oct 08, 11:51 PM
    • #5
    • 13th Oct 08, 11:51 PM
    We could argue long into the night about deprivation of capital,the truth of the matter being that different DMs have different ideas about the rules,so my advice was more of a general nature,in matters like this I would perhaps advise written contact with the OP benefits office
    Originally posted by woodbine

    I was just making the point that not all spending would be classed as deprivation of capital, and that this money could be used to make their life more comfortable - but yes, I agree, advice should be sought of the benefits office
  • bigbill
    • #6
    • 14th Oct 08, 7:42 PM
    • #6
    • 14th Oct 08, 7:42 PM
    You would lose about £36 weekly from your on-going Income Support.

    That's you then 100% legal and above board and lets be honest loaded, no threats of fraud, no rent or council tax to pay ect.
  • scooby1001
    • #7
    • 14th Oct 08, 8:07 PM
    • #7
    • 14th Oct 08, 8:07 PM
    I don't know what the situation is now with lump sums and means tested benefit payment but i would say be careful what she spends the money on. I sold my home in 2001 after my divorce and i got £9,000 from the sale. I had£5,000 worth of debts which i wanted to pay off. I had to come off IS as at that time i was over the limit for capital. I was told that if i paid off my debts, took a holiday or bought a computer they would consider that deprivacation of income. Once below £8,000 I had to send receipts in to the DWP for EVERYTHING i bought until i got down to £3,000. To my mind there was no advantage of getting the money at all as we could not clear my debts or take a holiday. I was not looking to do a world cruise or anything just a holiday(had never been on one before) I don't know what it is like now but that was the worst time of my life.
  • MrsKelly
    • #8
    • 14th Oct 08, 8:15 PM
    • #8
    • 14th Oct 08, 8:15 PM
    There is a way of avoiding getting this money. That is by making a Deed of Variation renouncing her inheritance.

    But the fact is that this money could be used to make her life and her children's life better. She may need a new car, new furniture, a family holiday (not a round the world cruise!), a new kitchen. These things would not be viewed as intentional deprivation of capital.
    Originally posted by zzzLazyDaisy
    I'm not sure if this is true everywhere but my aunt got a compensation payout of over £6000 she is a single widow with 2 disabled children and they were going to cut her benefits as mentioned in the thread but because she could prove that she needed the money to get a new bathroom which then left her with less than the £6000 limit they did not change the amount she received.
  • SuziQ
    • #9
    • 15th Oct 08, 10:06 AM
    • #9
    • 15th Oct 08, 10:06 AM
    I think it's bizzare not to allow people to get rid of debt with inheritance-it's debt that keeps most people in poverty I feel and getting rid frees up more money to live on. I think if it is debt that has been there for -say-more than 5 years then you should be allowed to pay it off with an inheritance (to avoid people running up debt in anticipation of a payout!) Still,rules are rules.
    Tomorrow is always fresh, with no mistakes in it!
    • seven-day-weekend
    • By seven-day-weekend 15th Oct 08, 12:20 PM
    • 24,889 Posts
    • 44,804 Thanks
    seven-day-weekend
    I think their take on paying debt off is that you have managed so far, you can carry on doing whatever it is you were doing before; you shouldn't pay it all off if it then means you have to rely on State Benefits to live.

    I suppose it's fair enough really.
    I am a Job Club Coach in Association with CAP
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  • MrOJones
    Many Thanks
    Thank you all for your answers. Intersting and Helpful.
  • lilac_lady
    It puts people into the same position as those who have a small private pension that takes them out of being able to claim Pension Credit. A line has to be drawn somewhere but it's an unfair situation for many.
  • real1314
    I think it's bizzare not to allow people to get rid of debt with inheritance-it's debt that keeps most people in poverty I feel and getting rid frees up more money to live on. I think if it is debt that has been there for -say-more than 5 years then you should be allowed to pay it off with an inheritance (to avoid people running up debt in anticipation of a payout!) Still,rules are rules.
    Originally posted by SuziQ
    Rules might be rules but there are no absolute rules on paying off debts. i think it's a case by case decision and whilst there is probably (I'm guessing here) some degree of consistency, there's probably some degree of variance too.

    Bet thing to do if you want to read up on it is to google "commissioner's decisions uk deprivation" which will throw up some stuff, including this:
    http://www.disabilityalliance.org/comm3.htm

    Then search the page (edit>find) for "deprivation" - nice case on that page.
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