Inheritance and debt repayments

AFCB

As a couple, we are receiving an inheritance from a deceased relative, and from this we are going to be paying some debts off as well as replacing our car (which is costing more and more each year in repairs, and is a necessity as my wife is disabled and I am her carer.)

There are debts to relatives - some of which can be proved and others not so - and some official debts (which can be proved.)

Paying the debts off and buying a car will take us slightly over the savings limit for Housing Benefit so we will have some money taken off us - which there is no problem with - but I am concerned that they will consider that we are trying to avoid having too much taken off of us by repaying debts that cannot be officially proved.

What do forumites think?

cattie

I know that DWP do not agree with non essential debts being repaid when you come into money & claim benefits. If debts are currently being repaid say monthly, then the expectation is that the monthly payments continue until the debt is repaid, otherwise they can treat you as if you still have the money.

I don't know how HB view things though, but am sure somebody else here will be able to put you right on that.

Morglin

You need to check with the DWP and HB department first, before you spend the money.

It has to be 'reasonable' but what is reasonable seems to vary greatly.

Lin

rogerblack

AFCB wrote: »

Paying the debts off and buying a car will take us slightly over the savings limit for Housing Benefit so we will have some money taken off us -

Others have correctly referred to 'notional capital' - you may be treated as still having the capital if you spend it in order to get more benefit. (in their opinion).

The other issue is that each expense is considered separately.

If - for example - you have 8K, spend 2K on a holiday to the bahamas, and 3k on a reasonably priced second hand car, the fact that the 4K is treated as notional capital doesn't matter - as 8-3=6. Your expenditure on the allowed purchase means that the fact you have 4K 'notional capital' plus 2K actual capital in your bank = 6K, so your benefits are not affected.

getmore4less

Not getting mobility?

pmlindyloo

Deprivation of capital is judged purely on whether the money was spent in order to get benefits/keep benefits/increase benefits.

As part of this process each case is looked at individually.
One of the things they have to judge is whether the spending was done in the knowledge that it might affect your benefits.

Since you are aware that the spending might affect your HB then basically this knowledge has to be weighed against whether your spending was justified and was taken using sensible choices.

Buying a really expensive car to replace your old one would probably not be a 'sensible' choice. Buying a reasonably priced and reliable car in your circumstances might be.

Paying back debts which are not under some kind of court order may not be seen as a sensible choice if they are reasonable managed. ie. on 0% interest or you are on a Debt Management Plan)

Giving money to relatives would probably be seen as deprivation especially if there was no formal agreement.

I have no idea of the amount of money involved.

I think that the kind of premise that seems to operate is that the money should be used wisely with consideration of the ability to use it so as not to be relying on benefits.

Having said that, I am not the Decision Maker.

If your wife is disabled is she claiming/eligible for PIP/DLA/AA?

bll78

The DWP clearly see paying back debts early as deprivation of assets I'm afraid. So you can't even get away with clearing your debts. As per the quote below from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/236960/hbgm-bw1-assessment-of-capital.pdf



When capital has been used to repay a debt give careful consideration as to whether the debt needed to be repaid at that time. If there was no legal obligation to do so then it may be that part of the claimant’s purpose was to obtain or increase the amount of benefit.

AFCB

It seems that it all depends on the thoughts of the decision makers at the relevant authority.

We want to do the right thing so will get in touch with the HB people to discuss it with them.

Thank you all again for your comments and advice

AFCB