Effect of inheritance on IB and HB

ComradeGeeky

The dilemma is indeed between a cheap caravan/park home + more inheritance money left to live off vs a solid £100k house + no money left to live off + stress of running it.

Found this on RightMove - not everyone's cup of tea, but he would love it:-

rightmove.co.uk/property-for-sale/property-20450076.htm

(Sorry, as new user apparently not allowed to post links).

Obviously there are issues like whether a park allows year-round residence, the level of service charges etc. We are not looking to make money out of the property (as there is no-one to leave it to) - just to give him somewhere relatively secure to stay in for the rest of his life. The idea of living among older people is appealing to him (he's not that far off 50 himself).

We have also looked a bit into shared ownership (buy half a property for say £70k, pay rent for the other half and thus retain HB) but most properties seem to be newbuild flats so the neighbour issue arises again.

Happy new year to everyone by the way

xylophone

Just a thought - how was the money left to the relative - in trust, a direct bequest etc? This is important because it leads to considerations of who exactly can deal with the funds.

If it is a direct bequest (and assuming that no one has power of attorney etc) then presumably the money must be passed direct to the relative?

lynnysinger

rogerblack wrote: »

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.

is IB not means tested on income/savings etc?
happy new year all:beer:

ComradeGeeky

xylophone - testator is elderly but still alive (and involved in discussions). We are just planning ahead! Relative will probably get a direct bequest.

xylophone

Is this wise considering his problems? Might be worth discussing alternatives with a solicitor experienced in wills and trusts?
http://www.mencap.org.uk/what-we-do/our-services/wills-and-trusts - I realize that your relative is not mentally handicapped but this link might provide some food for thought.

rogerblack

ComradeGeeky wrote: »

xylophone - testator is elderly but still alive (and involved in discussions). We are just planning ahead! Relative will probably get a direct bequest.

It may work out better for the relative to simply make it so that the money - or at least the bulk of it - can only be spent on a home, with some left over in a trust for maintenance.

An important fact is that you make clear to the DWP - ideally beforehand - that there is no option of the money being paid in cash that they are free to do anything with.

If, for example, you were to tell the DWP 'I arranged for my relative to leave the money in trust, so it doesn't count against my benefits' - then you can be treated as if you do have it. (notional capital)

ComradeGeeky

We have considered trusts and plan to seek legal advice on this. My understanding was that they are expensive to administer unless you are somewhat wealthier than we are. I have calculated that if my relative kept his expenses to £200 a week (what he lives on now) the £150k could last 10 to 15 years. There is always the danger that he might blow the lot, but he is an adult and all we can do is advise. I am very aware of the fine line between helping and controlling another person, and ultimately it is (will be) his life and his money.

Your help and ideas are really appreciated.

xylophone

Have a look at this http://www.hmrc.gov.uk/trusts/types/discretionary-accum.htm - vulnerable beneficiaries (your relative?) at the bottom.
It's not so much that Trusts are expensive to administer as the fact that someone has to be willing to cope with the administration and deal with HMRC's requirements. It can be time consuming and a bit of a pain. However, in your relative's situation....

ComradeGeeky

Thanks *xylo* - I don't see him as "disabled" but I guess it's all a question of definitions and I will enquire when we eventually get round to seeing a solicitor or IFA.