Put inheritance into pension. Is this Deprivation of Capital?

Grenig

I live with my husband who has advanced multiple schlerosis (MS) and Krohns disease. He claims Disability Benefit and we also get help with Council Tax. I work cleaning jobs but we struggle to make ends meet. We own our own home with no mortgage.

My father recently died and I will inheret 1/3 share, which will amount to approx 50,000. This will take us over the 16,000 capital allowance and hence benefits will stop. I am sad that I will not be able to save that money for my future.

Could I place majority of this inheritençe into a private pension without it being viewed as deliberate deprivation of capital? I have no existing private pension. Furthermore, I have not been able to pay pension stamp for the last 20 years so I will not be entitled to much state pension and I am already worried about my pension years (I am 56 years old) especially since my husband (due to his illness) will probably not reach pension age.

Thank you in advance for any advice

claretmatt

You can place the higher of 100% of your earnings or £3600 gross into your pension each tax year as a personal contribution up to a cap of £50,000 gross.

As you have no pension in place you will not be allowed to contribute £50,000 asa net contribution

shop-to-drop

If you are struggling to make ends meet why would you want to deprive yourself of this money now?

rogerblack

claretmatt wrote: »

You can place the higher of 100% of your earnings or £3600 gross into your pension each tax year as a personal contribution

While correct from a pensions point of view, doing this from a benefits point of view may lead to all means tested benefit going away until you would have spent that capital on the benefit in question.

This is - unfortunately - a case where the only way round it is prior planning.
If, for example, the father had put the money into the appropriate trust, or indeed directly into a pension - then it would be disregarded.
However - now is too late.

The only way round this is legitimate expenditures which will bring you down below the threshold again.
This _cannot_ be 'rich living' - for example blowing it all on a holiday - but for example, properly insulating a draughty house, replacing the car, replacing appliances with ones with a lower running cost, ...
Basically anything that a reasonable person would consider a 'prudent' use of money, not done with the aim of gaining entitlement to benefit earlier.

In addition - there is no such thing as "Disability benefit" - if you mean disability living allowance - this is not affected by capital at all.
The council tax benefit will of course go away.

pstuart

Don't forget that a 'pre paid' funeral is a capital disregard. This can be done for the two of you.

poppasmurf_bewdley

Grenig wrote: »

I am sad that I will not be able to save that money for my future.

I am sad that you think you can stash your £50k windfall away for the future and still have the taxpayer paying for your Council Tax benefit.

zzzLazyDaisy

As a previous poster has said, Disability Living Allowance is not means tested. It doesn't matter how much capital you have, it will not affect your husband's DLA. What level of care component does he receive? This may entitle you to carer's allowance depending on your earnings (also not means tested).

Yes, your capital will mean that you lose any council tax benefit, but with no mortgage and your inheritance in the bank, life would be much easier for you. Isn't that what your father would have wanted for you?

daska

I never needed to ask the question as mum's estate was already willed into a Trust but assuming there was a Will, and as it is obvious that you're not the only beneficiary, it might be worth asking whether it's possible to do a deed of variation. Whether this might also count as deprivation I have no idea so you would need to take good advice on this. It may not be appropriate, it may be too late to suggest it.

If your husband is claiming DLA at mid/high rate care and you are his carer then you should be claiming carer's allowance which, even if you don't get any money from it will ensure these years count towards your pension.

Mojisola

daska wrote: »

I never needed to ask the question as mum's estate was already willed into a Trust but assuming there was a Will, and as it is obvious that you're not the only beneficiary, it might be worth asking whether it's possible to do a deed of variation. Whether this might also count as deprivation I have no idea so you would need to take good advice on this. It may not be appropriate, it may be too late to suggest it.

If your husband is claiming DLA at mid/high rate care and you are his carer then you should be claiming carer's allowance which, even if you don't get any money from it will ensure these years count towards your pension.

Doing a DOV would be considered deliberate deprivation.

Getting carer's allowance would help as would buying some years for your state pension.

As rogerblack said - Look critically round the house and see what work needs to be done that will make the house cheaper to run or maintain in the future, update floorings or furniture, make any adaptations that will make your husband's life easier.

Dunroamin

You also need to allow for the fact that, even if you were able to pay into a private pension the returns on £50,000 would be very small and would simply cancel out the loss of means tested benefits when you are over pension age.

Better to use the money now to make your husband's last few years and your retirement more comfortable.

pmlindyloo

Before you make any decisions you need to tell us exactly what benefits your OH is already on.

People have assumed that he is on Disability Living Allowance. This is not means tested so your inheritance will not affect it.

Is your husband also on Employment Support Allowance? If he is, which group is he in and is it contribution based? If he is in the support group and it is contribution based then again, the inheritance will not affect this.

You can find out what benefit he is on by looking at the award letter.

So it may be that the only benefit that is affected is Council Tax benefit.

You can check your entitlement to benefits by filling in your details onto the benefit calculator here:

http://www.turn2us.org.uk/benefits_search.aspx

If you believe that you will not get a state pension then you may be eligible for Pension Credit when you reach the appropriate age. However, since it is some years off I wouldn't worry about that as benefits are changing all the time.

You may be able to keep most of your benefits and perhaps even get Carer's Allowance which, again, your inheritance wouldn't affect.

Let us know what benefits your OH is getting, plus the hours you work, plus your salary per week and we can help more.