Mum in law sold her house and moved into council flat...

aeuerby

....and with the proceeds of her house sale she wants to give her 3 children £10000 each as their inheritance.
This will leave her with approx. £18000 when she has paid off her debts and moving fees.

Now, my hubby and I say she cannot give that money away and then claim benefits like Housing benefits, Council Tax benefits and pension credits (she's 66), she says she's spoken to a financial advisor and he has told her as long as she has no more that £16K she can claim benefits.

Does anyone know if she is able to give this money away and claim benefits please? (I hope my question makes sense)

Icequeen99

There is no capital max limit for pension credit (first 10,000 ignored and then £1 income is deemed for every £250 of capital), and if she gets pension credit then my understanding is that she would automatically get HB/CTB i.e. the 16,000 limit wouldn't apply to those.

If she doesn't qualify for PC, then the £16,000 limit would apply.

However, i would suggest you look carefully at deprivation of capital rules, basically if you get rid of money to bring yourself down to the limit DWP can still treat you as possessing that money. I doubt a financial advisor will know the ins and outs of the benefits system.

IQ

cheepskate_2

So not only has she deprived a person from getting a council property, seeing as she already had a property, Now she wants the taxpayer to fund her council house while she sets her children up with a nice little sum....Lovely.

Mojisola

aeuerby wrote: »

Now, my hubby and I say she cannot give that money away and then claim benefits like Housing benefits, Council Tax benefits and pension credits (she's 66), she says she's spoken to a financial advisor and he has told her as long as she has no more that £16K she can claim benefits.

That's not a financial advisor I'd put any trust in! Get her to ask him about deprivation of capital.

The DWP will assess her as if she still has the £30k that she's planning to give away.

aeuerby

cheepskate wrote: »

So not only has she deprived a person from getting a council property, seeing as she already had a property, Now she wants the taxpayer to fund her council house while she sets her children up with a nice little sum....Lovely.

Really helpful. Thank you.

My hubby and I do not agree with what she is doing but she is a very stubborn lady.
We do not want her money and believe she should use it to live from.
I cannot speak for her other children.
I was mearly asking some people more knowledgeable than us to confirm that should she give her money away then claim benefits she is in the wrong.

Thanks again for your really helpful reply.

aeuerby

Mojisola wrote: »

That's not a financial advisor I'd put any trust in! Get her to ask him about deprivation of capital.

The DWP will assess her as if she still has the £30k that she's planning to give away.

Thank you, we don't trust him either, but she is one stubborn lady.
We told her to go to CAB before she even put her house up for sale to get advice but she's made up every excuse under the sun as to why she hasn't gone.

I will look into this "deprivation of capital". Now I have a name for it I can find out more.
Thanks again :beer:

Mojisola

aeuerby wrote: »

Thank you, we don't trust him either, but she is one stubborn lady.

I will look into this "deprivation of capital". Now I have a name for it I can find out more.

If the advisor tries to tell her that after seven years, none of it will count, that's also bad advice. The seven year rule applies to inheritance tax and it doesn't sound as if that will apply to her estate anyway.

As budgets are squeezed tighter and tighter, the LAs and the DWP will be looking for reasons not to award means tested benefits and there is no time limit for them to go back through someone's accounts.

rogerblack

http://www.merton.gov.uk/advice-benefits/benefits/hb-ctb/benefitsclaim/hbctbsavings.htm - for example - look at 'notional capital.

In short - if she does give away 30K, and attempts to claim means tested benefits, if she does not say she's done this, she's liable to prosecution, when the overpayment exceeds 2K.
If she does, then they will likely treat her as still having that 30K.
It is quite likely that she will be considerably worse off due to this, and may have a claim against the financial advisers insurance for improper advice.

pmlindyloo

I think you need to make it quite clear to your MIL that if she applies for benefits they will ask for bank statements, savings accounts etc. if they see large sums of money going in and out this will 'trigger' an enquiry.

I do not see how she can hide what she is doing unless she gets all the money from the sale of her house in cash and hides it under the bed! (only joking!)

Druagh

pmlindyloo wrote: »

I do not see how she can hide what she is doing unless she gets all the money from the sale of her house in cash and hides it under the bed! (only joking!)

A bit 'off topic' but, I went to into a bank last week to try to change £2 worth of 1p and 2p coins into £1 coins, I was refused as I did not have an account there "..all cash transactions have to be traceable."

On this evidence, withdrawing or depositing £30,000 in cash would likely trigger an MI6 raid, never mind DWP interest...

Dunroamin

Like many financial advisers, this person is looking at issues like IHT rather than the effect these actions will have on claiming benefits.

You really do have to get through to her that she could be looking not only at a criminal prosecution and a forced repayment of benefits already paid but also a stop on benefits as if she still had the money in her account.