How would inheritance affect Brother's families benefits?

cepheus

I have just realised that my Brother may lose his benefits when he receives his inheritance. My understanding is that council tax and housing benefit will start to be affected assuming he has savings of £6000 and lose it altogether above £16000.

Child benefit I'm not sure.

What happens if the Child has savings, there used to be a 3k limit is this still applicable or was this rule really discontinued?

http://www.adviceguide.org.uk/england/benefits_e/benefits_help_if_on_a_low_income_ew/help_with_your_council_tax_council_tax_benefit.htm

http://www.nidirect.gov.uk/coc-capital-housing-benefit

ctb1982

Why would he need benefits if he has 16k?

Yes, he will lose it if he has that much and rightly so IMO, anything over 6k is £1 per £250 is taken off I believe.

zagfles

Child benefit and child tax credit are unaffected by capital (though any interest/dividends counts as income)

mynameistallulah

I imagine the person that left him the money would be happy to see him self sufficient rather than reliant on the state?

cepheus

I guess the ethical argument is that benefits only make up the working poor's wage up to what it should be in the first place. In a fair world or in some other European countries he wouldn't be on benefits because he would be earning two or three times as much per hr. So if you are poor the inheritance is effectively taxed by a different name, if you are richer you keep it! The amount he would receive, is paltry in relation to those who inherit property.

Personally I think unearned income is totally unethical, and everyone particularily the rich should not receive any inheritance. If that was the case there would be enough money to go round and a greater incentive to work rather than live of benefits/dividends/parents. However, the world doesn't work like that!

However, the ethical debate belongs to another board doesn't it? I'm just asking the question.

mynameistallulah

cepheus wrote: »

I guess the ethical argument is that benefits only make up the working poor's wage up to what it should be in the first place. In a fair world or in some other European countries he wouldn't be on benefits because he would be earning two or three times as much per hr. So if you are poor the inheritance is effectively taxed by a different name, if you are richer you keep it!

However I am not debating the ethics but asking the question.

Inheritance put into a child's account in order to avoid losing benefits are counted as notional capital ... and your argument is utter rubbish!

real1314

cepheus wrote: »

I guess the ethical argument is that benefits only make up the working poor's wage up to what it should be in the first place. In a fair world or in some other European countries he wouldn't be on benefits because he would be earning two or three times as much per hr. So if you are poor the inheritance is effectively taxed by a different name, if you are richer you keep it! The amount he would receive, is paltry in relation to those who inherit property.

Personally I think unearned income is totally unethical, and everyone particularily the rich should not receive any inheritance. If that was the case there would be enough money to go round and a greater incentive to work rather than live of benefits/dividends/parents. However, the world doesn't work like that!

However, the ethical debate belongs to another board doesn't it? I'm just asking the question.

The answer is Yes, it will affect his benefits, assuming they are means tested and that the means testing includes a capital criteria.

Should people not be allowed to inherit £5k from the elderly relative they looked and after and cared for in their final years?

:cool:

rogerblack

cepheus wrote: »

I have just realised that my Brother may lose his benefits when he receives his inheritance. My understanding is that council tax and housing benefit will start to be affected assuming he has savings of £6000 and lose it altogether above £16000.

If the death has already occurred, then attempting to vary the will, or put the money beyond normal counting will fail.
Money due to you in a will is - according to the DWP - already yours - you just haven't had it yet.

If the death has not occurred, and the person happens to vary their will in such a manner that means the inheritance is not counted for benefit purposes, nobody is doing anything wrong (legally).

Planning to give your inheritance away in the most tax, and benefit efficient way for your inheritors is a prudent, and sensible thing to do.

If I had a largish sum to do this with, I would certainly not want the person I chose to be little better off than if they did not have the money, with the worry that claims may not restart cleanly, and that they may be treated as having made 'unreasonable' expenditures.

st999

Do what I did when I managed to have more than £16,000 in the bank, tell the benefit people to get lost.

I am quite happy I no longer have to inform some nosy !!!!! in an office how much money I have in the bank.

He should be glad to be able to be free from claiming benefits.

cepheus

rogerblack wrote: »

Planning to give your inheritance away in the most tax, and benefit efficient way for your inheritors is a prudent, and sensible thing to do.

If I had a largish sum to do this with, I would certainly not want the person I chose to be little better off than if they did not have the money, with the worry that claims may not restart cleanly, and that they may be treated as having made 'unreasonable' expenditures.

I agree but unfortunately, circumstances change quickly. My Brother was made redundant recently and began claiming some benefits through only being able to work part time.

There are probably several legitimate expenditures which will drag him below the 16k if not the 6k level immediately.

They surely wouldn't count deprevation of assets as erasing debts and buying a standard car to replace the one which keeps breaking down that would be ridiculous. In practice neither can they expect him to have no holidays providing they are no different to what he had in previous years.

I suspect benefits or no benefits, most of his savings would be gone after a few years. I hope he would keep 6k all the same for emergencies.

sammyjammy

cepheus wrote: »

I agree but unfortunately, circumstances change quickly. My Brother was made redundant and began claiming some benefits through only being able to work part time.

There are probably several legitimate expenditures which will drag him below the 16k if not the 6k level immediately.

They surely wouldn't count deprevation of assets by erasing debts and buying a standard car to replace the one which keeps breaking down that would be ridiculous. In practice neither can they expect him to have no holidays providing they are no different to what he had in previous years.

I suspect benefits or no benefits, most of his savings would be gone after a few years. I hope he would keep 6k all the same for emergencies.

Not sure why your brother can't look into this himself, you haven't even led us to believe he asked you!

It will be deprivation of assets if your brother repays his debts in full unless he is being taken to court over them. Rather than guess what you think would be deprivation of assets why not have a look.
http://www.dwp.gov.uk/docs/hbgm-bw1-assessment-of-capital.pdf