When will inheriting part of Mum's property affect my benefits?

Mardle

My Mum died recently and owned her home. Her will apparently leaves a small amount to each of her grandchildren with the rest split between me & my brothers.

I am currently living in a rented house and receive pension guarantee credit, housing benefit & council tax benefit. Mum was in a care home so her home was already on the market but hasn't sold yet. I realise that I will lose some or all of my benefits but at what stage will this happen.

Will the part share of the house be taken into consideration immediately after probate or once it is sold?

Housing_Benefit_Officer

Once the estate is settled you are counted as owning the capital - however if it is for sale then the capital value is disregarded for 6 months or longer if reasonable.

Speak to Pension Services regarding what will happen to your Pension Credit once you receive your share of the estate. Depending on your age, the type of Pension Credit you receive it will either be disregarded or counted in full.

Mardle

Thank you.

I had visions of trying to survive on my pension from the time probate was granted to the house actually being sold. That was quite a scary prospect as the rent would take up almost all of my pension.

As far as pension credit is concerned I am hoping that there will be enough money from the estate to be able to buy a house. I imagine that between the estate being settled and the house purchase I will lose the pension guarantee credit but may be entitled to savings credit. Once the house purchase goes through I doubt if I'll have much savings left so I will have to reclaim the guarantee credit.

Housing_Benefit_Officer

Mardle wrote: »

Thank you.

I had visions of trying to survive on my pension from the time probate was granted to the house actually being sold. That was quite a scary prospect as the rent would take up almost all of my pension.

As far as pension credit is concerned I am hoping that there will be enough money from the estate to be able to buy a house. I imagine that between the estate being settled and the house purchase I will lose the pension guarantee credit but may be entitled to savings credit. Once the house purchase goes through I doubt if I'll have much savings left so I will have to reclaim the guarantee credit.

If the money is going to be used for a house purchase put it in a separate account and it will be disregarded for upto 26 weeks as capital if the money is intended for a house purchase.

portly1

Housing_Benefit_Officer wrote: »

Once the estate is settled you are counted as owning the capital - however if it is for sale then the capital value is disregarded for 6 months or longer if reasonable.

.

Not entirely correct.

No asset can be treated as belonging to a beneficiary until such time as the final distribution takes place.

If the house is not to be sold, then the beneficiaries jointly will own it. If the poster makes that property her main home, or they jointly do then it will never be treated as an asset.

If the house is to be sold, the estate cannot be finalised until the sale has concluded. Only then can the monies be finally transferred to the beneficiaries.

If as it seems that the OP is wanting to buy her own home with the distribution, she is best advised to find the property first and have the distribution used to buy it by mutual transfer.
Purchasing your main home with an inheritance is exempt from the capital rules.

There's actually no rule to say that the Administrator/Executor can't transfer the inheritance direct to the solicitor acting for the OP - that way it will never be the OP's money.

To have the inheritance sitting in the beneficiaries bank account after 26 weeks will cause problems for the OP.

I am to inherit a substantial amount in the next few months and as we claim Guaranteed Pension Credit it will have to be used to buy the main home if we are to retain our benefit income.
My wife is frantically trying to find a suitable property at the right price so that we can sell ours and buy a new one.

rogerblack

portly1 wrote: »

Not entirely correct.

No asset can be treated as belonging to a beneficiary until such time as the final distribution takes place.

To quote the DMG http://www.dwp.gov.uk/docs/dmgch52.pdf

Note:
This does not apply to property specifically bequeathed in a will. Such property
belongs to the person who inherits the property from the date of death of the person
whose estate is being administered and is actual capital. This is subject only to the
right of the executors or executors dative to resort to the asset if the remainder of
the estate is insufficient to meet the outstanding debts of the deceased
1
.

Adams_Dad

May I suggest you ask the solicitor handling mums will about a deed of variation? Essentially it is a way of changing mums will with the agreement of everyone involved. I suggest you get a discretionary trust set up and your 'share' is bequeathed to the trust. You would be a trustee, but the house and any other funds do not belong to you, they belong to the trust, so they do not affect your benefits.

It is not as simple as I make it out to be, but I think it would be well worth investigating - it has worked well for me and my late fathers estate.

Mojisola

Adams_Dad wrote: »

May I suggest you ask the solicitor handling mums will about a deed of variation?

This is still deprivation of assets!

Adams_Dad

Mojisola wrote: »

This is still deprivation of assets!

I respect that posters are entitled to their opinion on the way my finances are arranged. Obviously, I haven't complicated things in my earlier advice by going into great detail but I should add that there is nothing 'funny' going on here. DWP are fully aware of the existence of the trust, because I have to declare any income from it. The trust would also have to pay 50% income tax on any 'profit' it made and files annual solicitor-prepared accounts to HMRC. If/when the trust hands any or all of its assets over to me, then it will be income, on which I will be taxed.

This arrangement was suggested by a financial advisor and implemented by a (non-connected) solicitor - neither of whom would risk their professional standing with anything that was not legitimate.

Mojisola

Adams_Dad wrote: »

I respect that posters are entitled to their opinion on the way my finances are arranged. Obviously, I haven't complicated things in my earlier advice by going into great detail but I should add that there is nothing 'funny' going on here. DWP are fully aware of the existence of the trust, because I have to declare any income from it. The trust would also have to pay 50% income tax on any 'profit' it made and files annual solicitor-prepared accounts to HMRC. If/when the trust hands any or all of its assets over to me, then it will be income, on which I will be taxed.

This arrangement was suggested by a financial advisor and implemented by a (non-connected) solicitor - neither of whom would risk their professional standing with anything that was not legitimate.

Are they aware that the trust was created so that you could claim benefits that you wouldn't otherwise be entitled to?

rogerblack

Adams_Dad wrote: »

This arrangement was suggested by a financial advisor and implemented by a (non-connected) solicitor - neither of whom would risk their professional standing with anything that was not legitimate.

If the trust was started before you were entitled, or could reasonably have known you would need to claim benefits - there is no problem.

If it was done while you were claiming - or when you were about to claim benefits - it is illegal.

Solicitors and financial advisers can often not know benefits law very well.

http://www.dwp.gov.uk/docs/dmgch52.pdf

If you have documentary proof of what they have advised, in principle, that may be a slight defence - but not a complete one.