Will and benefits...

Silvermazda

I just need your advice. At the moment, I am full time student and my partner is on Incapacity Benefit and also work part time. We have responsible paying mortgage. One of my family have been passed away and she gave me the will with a big lump of sum. I do not want this money pay straight away into our mortgage because if we do then the bank will charge me 3% penalty. So 3 % penalty charge will cease after one & half years time.

I dont want the Incapacity Benefit find out about that and it is supposed for the mortgage. Of course we dont want to pay the penalty. We will pay to our mortgage in one and half years time and we will not use this money for our income.

So how can you advise me? If it is possible to put into private bank or trust fund without the benefits agency know.

Many thanks,

Peter...

The_MoneySavingKid

Silvermazda wrote: »

I just need your advice. At the moment, I am full time student and my partner is on Incapacity Benefit and also work part time. We have responsible paying mortgage. One of my family have been passed away and she gave me the will with a big lump of sum. I do not want this money pay straight away into our mortgage because if we do then the bank will charge me 3% penalty. So 3 % penalty charge will cease after one & half years time.

I dont want the Incapacity Benefit find out about that and it is supposed for the mortgage. Of course we dont want to pay the penalty. We will pay to our mortgage in one and half years time and we will not use this money for our income.

So how can you advise me? If it is possible to put into private bank or trust fund without the benefits agency know.

Many thanks,

Peter...

Are you asking how to perform fraud?

maman

I can see why it may seem tough Peter but this legacy is an income and if you have an income you may need less benefits. Benefits are for those in need and your need is lessened by your inheritance. That's just the way it is.

Aegis

The_MoneySavingKid wrote: »

Are you asking how to perform fraud?

Certainly sounds that way doesn't it?

Silvermazda

I don't consider myself as fraud but I never thought about it. At the moment, I dont have the will but it will be on the process. So that why I need to prepare in 2 months time.

You are allowed to put the whole money in the mortgage but I must inform the benefits agency. They will simple accept it. Because you cannot get the income from there.

I think I will need more advice from CAB.

rl290

Ignoring the fraud discussion...
If your mortgage interest rate is more than about 2%, then wouldn't you be better off paying the 3% penalty?! For example:

A mortgage of £100,000 would incur around £7,500 over one and a half years at 5% interest. If you paid it all off now, then you would pay only £3,000 early repayment fee. For all such facilities that I have seen, the 3% fee applies only to the amount paid off (not the full mortgage), so you would always be better off paying the fee to reduce the debt now.

Have I missed something?

rl290

Answering my own question...
I missed the fact that you lose the interest you would have received if you kept the money in the bank for a year and a half. This may well just make you better off by delaying payment of the mortgage, depending on your interest rates (both of savings and the mortgage) and tax details... but not by much.

bengal-stripe

Incapacity benefit is not means-tested, so any capital is not taken into account.

Means-tested benefits like Income support, Housing- or Council Tax Benefit are subject to the capital rules. Capital of up to £6,000 will not affect those benefits. Between £6,000 and 16,000, the benefits will subject to deductions: For benefit purposes, your savings are assumed to produce income at £1 a week for every £250 between the lower and higher limit. Above £16,000 you will not be eligible for means-tested benefits until the savings have dropped below that figure.

As I said, this applies to means-tested benefits.

opinions4u

I think this is one where you need to take some legal advice.

If all beneficiaries of the will agree, it may be possible to have the will redrawn retrospectively to set up a trust fund for you, rather than providing you with income/capital. This would potentially allow you to benefit from the legacy in a way that allows you to choose how/when legally avoiding negative impact on your benefits.

You will need to weigh up the impact on your benefits and the cost of doing this (no idea myself, sorry) before going ahead with such a course of action. There's no point spending £1,000 to protect a fiver in benefits for example!

Silvermazda

@ Options4u, Bengal-stripe and rl290....

Thank you very much for your useful information and I will make sure to work it out with IFA and CAB. I am sure they will find a good way to protect my money.

Again, thank you for your help.

Silvermazda

opinions4u wrote: »

I think this is one where you need to take some legal advice.

If all beneficiaries of the will agree, it may be possible to have the will redrawn retrospectively to set up a trust fund for you, rather than providing you with income/capital. This would potentially allow you to benefit from the legacy in a way that allows you to choose how/when legally avoiding negative impact on your benefits.

You will need to weigh up the impact on your benefits and the cost of doing this (no idea myself, sorry) before going ahead with such a course of action. There's no point spending £1,000 to protect a fiver in benefits for example!

That is what I thought. You could be probably right. So what sort of legal advice should I seek? IFA, Accountant or CAB?

Many thanks for your time!