How would inheritance affect Brother's families benefits?

cepheus

rogerblack wrote: »

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.

Indeed that would have been the wishes of my Mother. His part of the will is in danger of effectively being given to the state because he is poor. Expressed this way I think the hostile attitude of many of those on this thread at any attempts at tax-benefit planning is despicable.

antrobus

cepheus wrote: »

...Personally I think unearned income is totally unethical,

Don't benefits, by definition, count as unearned income?

cepheus wrote: »

...and everyone particularily the rich should not receive any inheritance. If that was the case there would be enough money to go round...

If that was the case then 'everyone' would make sure that their net wealth was approximately £zero at the time of death.

cepheus wrote: »

.. His part of the will is in danger of effectively being given to the state because he is poor...

Now you know why people feel the way they do about paying inheritance tax. Besides, what's wrong in giving the state money? How else is the state going to afford to pay for all the goodies it dispenses?

cepheus wrote: »

.. I'm just asking the question.

Well, the answer to the question is, as you have discovered, that inheriting a big wodge of cash will indeed effect the ability to receive means tested benefits such as HB and CTB. On the assumption that the mother in question doesn't look like dying in the near future then, of course, this is an entirely hyothetical outcome, as the brother may well find more gainful employment in due course and thus be able to enjoy his inheritance to the full when the day comes.

Otherwise you could ask your mother to change her will so that your brother doesn't receive a penny, and let you have the lot. On the understanding (you can all trust each other can't you) that you look after his share on his behalf.

real1314

cepheus wrote: »

His part of the will is in danger of effectively being given to the state because he is poor. Expressed this way I think the hostile attitude of many of those on this thread at any attempts at tax-benefit planning is despicable.

So, should he be able to inherit £2m and still keep his benefits?

And, wouldn't "his part of his wages be given to the state because he is poor" if he got a job, and would therefore lose benefits?

Are you advocating a system where once people get some sort of benefit, they keep it regardless of any changes?

Of course, you'll say "no, not £2m, that's just silly" - well, from the persepctive of a single person working full time, let's call them Fred, on a wage of £12k, paying tax, receiving no benefits, and being unable to save £500; £16k is far too much money for someone to have and expect Fred to provide subsidy to.

Much like most people's view of what constitutes a"high earner" (25% more than the respondee's wage), people are heavily influenced by personal bias and self-protection.

Q: What do people think the capital limit should be?
A: More than I have /expect to get?

:cool:

zagfles

real1314 wrote: »

So, should he be able to inherit £2m and still keep his benefits?

Well if the inheritance was £2 million there'd be a hell of a lot of tax to pay on it (at least half a million). That would dwarf any benefits savings.

Of course people do use various dodges to avoid giving the state that £500,000, but it doesn't seem to cause the same moral outrage as someone who tries to avoid losing a few thousand in benefits.

And, wouldn't "his part of his wages be given to the state because he is poor" if he got a job, and would therefore lose benefits?

Are you advocating a system where once people get some sort of benefit, they keep it regardless of any changes?

You mean (in terms of capital) like tax credits, child benefit, DLA etc?

Of course, you'll say "no, not £2m, that's just silly" - well, from the persepctive of a single person working full time, let's call them Fred, on a wage of £12k, paying tax, receiving no benefits, and being unable to save £500; £16k is far too much money for someone to have and expect Fred to provide subsidy to.

It's not silly at all. Just have a citizen's income which everyone gets, flat rate tax, and no means testing at all, then Fred would get "benefits" too.

Much like most people's view of what constitutes a"high earner" (25% more than the respondee's wage), people are heavily influenced by personal bias and self-protection.

Q: What do people think the capital limit should be?
A: More than I have /expect to get?

:cool:

Or "how much can I save before being disallowed benefits". Perhaps we ought to encourage saving rather than discouraging it. Then maybe the Western world wouldn't be in the mess it's in.

rogerblack

zagfles wrote: »

Or "how much can I save before being disallowed benefits". Perhaps we ought to encourage saving rather than discouraging it. Then maybe the Western world wouldn't be in the mess it's in.

I've argued in the past that the capital limits on benefits should be modified somewhat.

Basically that it should be possible to defer benefit - and have it earn interest at the bank of england baserate.

This would never count against your capital limit, but would revert to the state on death.

This would both let people on benefits save, cut the benefit bill due to not paying out some of the money immediately and the savings due to the unspent money being clawed back on death.

Dunroamin

zagfles wrote: »

Of course people do use various dodges to avoid giving the state that £500,000, but it doesn't seem to cause the same moral outrage as someone who tries to avoid losing a few thousand in benefits.

.

Speak for yourself - it certainly does for me and many others!

zagfles

Dunroamin wrote: »

Speak for yourself - it certainly does for me and many others!

I was speaking in general - I too make no moral distinction between arranging your affairs to minimise tax and arranging them to maximise benefits. If there are legal ways of doing either then if those legal ways are considered immoral by some, they should argue for the loophole to be closed instead of moralising about people who take advantage of them.

But there is no doubt that there is much more moral outrage directed at people trying to maximise benefits than there is at people trying to minimise tax. There is a whole board on MSE dedicated to "cutting tax".

If someone asks "can I reduce tax by paying into a pension" it doesn't cause the same moralising as if they ask "can I keep my child benefit by paying into a pension".

Tiddlywinks

st999 wrote: »

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.

I agree with your sentiment about being glad to come off benefits but I don't agree with your form of words... those 'nosey' types are just people paid to do a job and ask questions on behalf of a government agency in order to establish your entitlement.

cepheus wrote: »

...His part of the will is in danger of effectively being given to the state because he is poor. Expressed this way I think the hostile attitude of many of those on this thread at any attempts at tax-benefit planning is despicable.

No.... the means-tested benefits will stop because your brother will have the 'means' to support himself to a standard deemed acceptable by current legislation - why is that wrong?

Your brother will have the resources to support himself - that should be his focus. You should be glad he will be self sufficient rather than in his current unfortunate situation which sees him needing support from the state.

It's all about perspective and having a sense of personal responsibility - not entitlement!

rogerblack

Tiddlywinks wrote: »

It's all about perspective and having a sense of personal responsibility - not entitlement!

I point you at the sticky on this board " Its about helping people get their entitlement! Not about benefits policy!"

(I know this isn't quite what you're arguing, and this is somewhat out of context)

Boots888

Tiddlywinks wrote: »

I agree with your sentiment about being glad to come off benefits but I don't agree with your form of words... those 'nosey' types are just people paid to do a job and ask questions on behalf of a government agency in order to establish your entitlement.



No.... the means-tested benefits will stop because your brother will have the 'means' to support himself to a standard deemed acceptable by current legislation - why is that wrong?

Your brother will have the resources to support himself - that should be his focus. You should be glad he will be self sufficient rather than in his current unfortunate situation which sees him needing support from the state.

It's all about perspective and having a sense of personal responsibility - not entitlement!

Many people are now have their non means tested benefits taken away from them due to recent, and retrospectively implented changes in the system.

So you tell those implementing these changes that its all about perspective and the state and society having a sense of responsibility to look after those vulnerable in society and not ripping the rug from under their feet, on which they've been assured the could rely on.

Maybe the OP's brother is one of those people??

From my perspective, it's inhumane (if not illegal) to do what they've done.