Effect of inheritance on IB and HB

ComradeGeeky

A family member stands to inherit £150,000 ... but he's on incapacity benefit and housing benefit. He's a single man in his late 40s living in a run down room in a hostel and he has mental health issues.

The £150k means he would lose all his benefits, but it's not enough to set him up for the rest of his life. We have considered using the money to buy a very cheap property (like a caravan or park home) and then he could live off the rest of the money for as long as possible.

My question is, when the money eventually runs out, would he be able to remain in his caravan (or whatever) and reclaim incapacity and housing benefits? If he owned a caravan he wouldn't be renting, but he would have to pay service charges, ground rent, pitch fees, etc.

We are not looking to defraud the benefits system - just seeking a way to use the money to improve his living conditions in the longer term.

Has anyone here dealt with a similar issue or does anyone have a better idea about how to handle the situation? I realise we will probably have to consult a specialist solicitor or financial adviser at some point.

Thanks in advance

rogerblack

IB is not affected by the inheritance.
However, it will be over the next year or so be converted over to ESA, which following a years grace period - if not in the support group - be converted over to income-based ESA.
And the 150K will entirely wipe out entitlement to that.

If he purchases a caravan, or other property, and lives in it, then yes, this is entirely disregarded for benefits purposes.

The key is: Is his purchasing the caravan so that he can claim benefits. If so, then he may be treated as if he still had the money.

If there are other reasons at the forefront, then it's less risky.

http://www.dwp.gov.uk/docs/dmgch52.pdf

First thing to do is to read and understand the above.
Then contact the DWP, and outline the case, asking for a decision.

If they say 'yes, this is acceptable' - then you're fine.
Otherwise - seeking specialist advice may be the only option.

xylophone

I am not sure that a park home would be the ideal choice for a person with mental health problems.
Would it be possible to find some kind of sheltered housing for him? http://www.nhs.uk/CarersDirect/guide/practicalsupport/Pages/Housing.aspx
http://www.telegraph.co.uk/finance/personalfinance/consumertips/7816757/Preparing-the-financial-future-for-people-with-learning-disabilities.html - there might be something here to assist.

Dognobs

Where does he live? 150k would buy a nice flat in most parts of the country. Buy the property would be the best thing you could do as he could rent it out if he needs care in the future.

ComradeGeeky

Wow thanks everyone - some interesting points.

He would not be purchasing the caravan to avoid benefits - merely to have someone permanent to live that costs the least amount of money to buy and run using the remaining capital. We were thinking a flat or bungalow would be too costly to run, especially if he was no longer entitled to housing benefit - although the idea of renting it out is something we hadn't considered.

I would love him to get some kind of sheltered housing support, but he is too easily put off by all the hoops you have to jump through. He can't deal with bureaucracy and paperwork, doesn't acknowledge his mental health problems, and frequently "self-medicates" with drugs and alcohol. He is just not focused enough to go through the application process, and it's difficult for the family to help from afar. However, we could reconsider this option and I will certainly have a look at your links xylophone.

Thanks so much for your help.

tomjonesrules

xylophone wrote: »

I am not sure that a park home would be the ideal choice for a person with mental health problems.
Would it be possible to find some kind of sheltered housing for him? http://www.nhs.uk/CarersDirect/guide/practicalsupport/Pages/Housing.aspx
http://www.telegraph.co.uk/finance/personalfinance/consumertips/7816757/Preparing-the-financial-future-for-people-with-learning-disabilities.html - there might be something here to assist.

As someone with MH problems, I would disagree - there is something about not being on top of someone, and maintaining independence whilst within a community that is very appealing.

ComradeGeeky

Yes tomjones, in fact the reason for considering a caravan is the fact that it is detached. My relative gets extremely stressed by his neighbours - noise, fights, fear of break-ins, needles outside his door etc (he does live in a real hell hole). I think some peace and security might help alleviate his depression. The downside might be loneliness, but he enjoys his own company and he does visit friends.

laurel7172

Remember that a caravan isn't a truly permanent structure...it will depreciate rapidly and need substantial maintenance or replacement in your relative's lifetime-possibly more than once.

If the issue is the neighbours in the hostel, he might find that non-hostel neighbours cause him less stress?? Just a thought...good luck.

tomjonesrules

laurel7172 wrote: »

Remember that a caravan isn't a truly permanent structure...it will depreciate rapidly and need substantial maintenance or replacement in your relative's lifetime-possibly more than once.

If the issue is the neighbours in the hostel, he might find that non-hostel neighbours cause him less stress?? Just a thought...good luck.

Park homes are built to last, possibly more than most new builds!

The problem with any kind of non detached home is that neighbours are unpredictable. Before my current home I lived in what appeared to be a lovely mix of flats and houses, then the neighbours changed and I had a nightmare. I am lucky now, I met my neighbours before I moved and they have not changed, but there will be a time when they do, and goodness knows what will move in next. Many park homes/ caravan based communities have committees that have to approve residents before they are able to buy there - it is a good way of sifting out the unsuitable residents!

Derivative

Nevermind a caravan, £150k will buy a house in many parts of the country.

Quick bit of googling got me this:
http://www.rightmove.co.uk/property-for-sale/property-19648242.html

Not saying it's ideal for him to move far away, or that a 3 bed is the best option.
And I have no idea how the regulations work with regards benefit.

But you can do better than a caravan if he's willing to relocate.

Park homes are built to last, possibly more than most new builds!

With regards this - I've not put too much research into park homes.
They seem ideal for single youngsters - just how well do they hold their value?
How much would you expect to spend maintaining one over 30 years?

tomjonesrules

EdgEy wrote: »

Nevermind a caravan, £150k will buy a house in many parts of the country.

Quick bit of googling got me this:
http://www.rightmove.co.uk/property-for-sale/property-19648242.html

Not saying it's ideal for him to move far away, or that a 3 bed is the best option.
And I have no idea how the regulations work with regards benefit.

But you can do better than a caravan if he's willing to relocate.


With regards this - I've not put too much research into park homes.
They seem ideal for single youngsters - just how well do they hold their value?
How much would you expect to spend maintaining one over 30 years?

Park homes are actually designed with quite the opposite in mind - those in their later years.

I am not sure about them holding their value, but in terms of maintenance I cannot see them costing anymore than a new build over thirty years. Having said that, I understand woodbine lives in a park home, so will have far more knowledge than me. I'd like to think I was pretty savvy financially though, and had it not been for the age factor, I would have bought one.

Apologies if anyone sees it as a generalisation, but the beauty of living in an older community is exactly that, a community. I find my older neighbours far more open and (at times, far too!) willing to help than the younger ones. They don't mind that you don't conform to some norm, they'll judge you on who you are?

(Second apology - I am slightly tipsy, but far more honest as such!)