Getting rid of capital to get benefits

baloo

My mother has scrimped & saved all of her life. She is over 80 years old and registered disabled. She has £20+ in savings, which she refuses to spend. She wishes to leave it to family members when she dies!
My problem is that she is only just breaking even after she's paid out her basic living expenses on a weekly / monthly basis.
She only receives a basic state pension and also Attendance Allowance. She gets a small reduction in Council Tax payments as she's single. Because of her savings, she seems not to be entitled to any other benefits as most are means tested (even tho' her savings are giving a TINY return).
My question is - if she were to give her savings away as a "gift" now (i.e. before her death) would there be implications to her then applying for more benefits?
I understand the Inheritance Tax implications on the gift if she dies within 7 years etc.

healy

baloo wrote: »

My mother has scrimped & saved all of her life. She is over 80 years old and registered disabled. She has £20+ in savings, which she refuses to spend. She wishes to leave it to family members when she dies!
My problem is that she is only just breaking even after she's paid out her basic living expenses on a weekly / monthly basis.
She only receives a basic state pension and also Attendance Allowance. She gets a small reduction in Council Tax payments as she's single. Because of her savings, she seems not to be entitled to any other benefits as most are means tested (even tho' her savings are giving a TINY return).
My question is - if she were to give her savings away as a "gift" now (i.e. before her death) would there be implications to her then applying for more benefits?
I understand the Inheritance Tax implications on the gift if she dies within 7 years etc.

Yes, it would probably be viewed as deprivation of capital.

fluffymovie

Hi there

From the way you have phrased the question, I would make a decision that your mother has deliberately deprived herself of money to claim benefits and so she would be refused CTB.

I know it sounds harsh but she has savings and she should use those before asking the tax payer for assistance. That is what she has saved for after all, a rainy day.

The capital limit is £16,000 unless your mother is awarded Pension Credit paid at the Guaranteed rate. If she gets a very small pension as you suggest, this may well be possible and she can then be passported onto full Ctax benefit even though she has £20k.

C_Mababejive

She should have thought of this years ago, i.e drawn down cash,stockpiled it elsewhere etc. Thats what I'll be doing in the run up to retirement.

Thriftylad

Your mum should claim Pension Credit immediately, as there is no upper capital limit for this benefit. The first £10k of any savings are completely disregarded and anything above this amount is counted as £1 per week income for every £500 in capital or part thereof. For instance, if your mum has £20k in savings this would convert into a weekly 'tarriff income' of £20 and be added onto the rest of your mum's income when the Pension Credit assessment is being done. If your mum is then awarded the 'Guarantee' part of Pension Credit she will be entitled to full Council Tax Benefit too. This is because all savings/income are disregarded if someone is in receipt of Guarantee Pension Credit.

Intentionally giving away capital to gain benefit could be picked up on and isnt a good idea. It can still be treated as notional capital and counted in the assessment whether your mum has it in her possession or not. However, if someone else's name is also on the bank books, then only 50% of the capital would be classed as belonging to your mum. Some capital such as that with a life insurance policy is also disregarded in full as are benefit arrears payments.

baloo

C_Mababejive wrote: »

She should have thought of this years ago, i.e drawn down cash,stockpiled it elsewhere etc. Thats what I'll be doing in the run up to retirement.

Oh yes! This is something that we have repeatedly told her over the past 15 years!!!! But to no avail. It's only now that she's realised the implications sadly. She's never been very money savvy and would have probably put it under her mattress if it were left up to her:eek:!
Thanks for your replies. It has backed up my own thoughts on it.

McKneff

C_Mababejive wrote: »

She should have thought of this years ago, i.e drawn down cash,stockpiled it elsewhere etc. Thats what I'll be doing in the run up to retirement.

So you'll hide all your money and then claim benefits

Oldernotwiser

baloo wrote: »

Oh yes! This is something that we have repeatedly told her over the past 15 years!!!! But to no avail. It's only now that she's realised the implications sadly. She's never been very money savvy and would have probably put it under her mattress if it were left up to her:eek:!
Thanks for your replies. It has backed up my own thoughts on it.

I'm sure you would - you're looking after your inheritance rather than looking after your mother!

Encourage your mother to live as full a life as possible using the savings she's worked for. Tell her you don't want her money and want her to spend it on herself.

wobin

McKneff wrote: »

So you'll hide all your money and then claim benefits

This was a joke lol

dmg24

wobin wrote: »

This was a joke lol

I doubt McKneff was joking, the DWP certainly would not be.

McKneff

dmg24 wrote: »

I doubt McKneff was joking, the DWP certainly would not be.

err, it wasnt me who the poster was talking about when he said it was a joke, it was c mabijve or someone like that. It was me who questioned his motives to hide his money then claim benefits.