Inheritance

colinporter

Good morning all,

Please could someone help with the following? I have read several similar posts on here (but nothing quite the same) and attempted to trawl google, which has just led to more confusion.

My parents (both retired) are about to inherit approximately £25-£35,000 after the sale of my deceased grandmothers bungalow, they live in a council bungalow and currently receive various benefits such as a mobility car, rent & council tax assitance etc.

Both parents are insistant (despite us pointing out to them they could easily be around for another 20 years plus, hopefully!) on passing some of the inheritance to my wife and I, plus our two children.

Any monies given to our children will be paid into their existing saving accounts but my wife & I have discussed that any monies given to ourselves would be best put to oneside in case said parents realise 10 years down the line that things are a little tight.

As the parents have minimal savings at the moment I do not believe inheritance tax would be applicable but could somebody please explain any possible limits of monies that can be given and more importantly if the above is legal? (with regards to receiving benefits and giving money away, sounds dodgy to me!).

Both parents are talking as if this money is some sort of curse, they are rather mature (to put it politely) and it does not take very much to stress them out.

Thanks in advance for your help.

jem16

colinporter wrote: »

As the parents have minimal savings at the moment I do not believe inheritance tax would be applicable but could somebody please explain any possible limits of monies that can be given and more importantly if the above is legal? (with regards to receiving benefits and giving money away, sounds dodgy to me!).

Any money given away would be seen as "deprivation of assets" as it would be construed that they are giving it away to avoid their benefits being cut as it will be with savings of £30k. It could also be taken into account if parents needed care.

sleepless_saver

You might want to let them know that if they give away the money and continue to claim the housing benefit and council tax benefit, then they will be committing fraud.

What they want to do is called deprivation of assets. There is a lot about it on the Benefits board. Basically, if they have the inheritance, they will need to inform all the agencies they get benefits from. They will be expected to use the money to meet rent, council tax etc until their total capital falls below £16k. If they get pension credit, they need to inform the Pensions Service too. The disability benefit ( I assume this is DLA?) wouldn't be affected.

They may think this is unfair, but why should the taxpayer support them when they have been lucky enough to inherit the means to support themselves? for a while at least.

Inheritance information is followed up by the authorities so if they give it away they could well be caught. Ditto if they decide to spend it on expensive cruises or cars etc.

sleepless_saver

There is no inheritance tax issue as the amount involved is too small.

colinporter

Thankyou both for your replies, this is exactly the information I was after, the parents have just been round for their Sunday morning visit and I have explained your comments etc to them.

On informing my dad that he was not allowed to blow the money on fast cars and cruises his reply was "But we both need new glasses" bless him lol.

They are not 100% sure of the benefits they currently receive but are going to bring round a recent bank statement on their next visit so that we can see exactly what they get and more importanatly what they currently do not have to pay for. This will hopefully then allow us to figure out who we have to inform of their financial gain (is there a central place that deals with this that would allow us to just notify the one body, or will it just be several letters to different bodies?). From discussions this morning we think they are currently getting the following, Attendance Allowance, State Pensions x 2 (not sure on the Pension Credit), Disability Living Allowance (think this is the car, but they also receive another small payment on top of this?), Council Tax & Rent benefits, mum also receives a small Post Office Pension & Dad gets an Ear pension?? (Hearing damage from many years ago due to piling, I`m guessing before ear defenders were available?)

I will research the "deprivation of assets" but if I may ask first does this mean that they cannot gift any monies whatsoever until they are below the £16K threshold mentioned above?

Thanks once again for your time.

Comyface

If they are inheriting the money jointly, would the limit in savings be £16k each before means tested benefits are affected? If so, you may have no problem in that direction. I'm not sure, but worth checking.

jem16

Comyface wrote: »

If they are inheriting the money jointly, would the limit in savings be £16k each before means tested benefits are affected? If so, you may have no problem in that direction. I'm not sure, but worth checking.

It's not £16k each - it's £16k either singly or jointly.

£16k savings and above means no entitlement, £10k and above means reduced entitlement.

To check what they would be entitled to check here;

http://www.turn2us.org.uk/benefits_search.aspx

Cook_County

You may want to speak with the executor of the estate and ask why a deed of variation was not considered to avoid this problem.

Mojisola

I don't think you will be able to tell from their bank statements what benefits they are getting. They should get a letter every year explaining how much money they are being given and why. See if they can find that.

My parents found the Pensions Service very helpful for giving advice about benefits. They will send an advisor to the house and discuss everything with your parents - and you, if you can be there. The advisor will explain how the inheritance will affect them and check that they are getting everything they are entitled to.

Their basic pension won't be affected, neither will DLA and AA because they are given for health reasons. It's likely that they may have to start paying Council Tax and probably the help with the rent would be affected.

sleepless_saver

They don't have to notify anyone till they actually get the money.

The local authority deals with housing benefit and council tax benefit, and they should have a letter from the local council saying what they get, and giving contact details (if not just phone the council up).

If they get pension credit, then if I recall rightly they don't need to do anything until their next review date comes up. Any change in pension credit would date from the review date and not be backdated to when they got the money.

AA, DLA, state pension and occupational pensions (like your mother's pension from the Post Office) are unaffected. Not sure what the "ear pension" is so can't comment on that.