House gift, life interest, benefits - help needed

MightyMousesMum

I am not entirely sure that this is the correct forum to be asking this in, so apologies if I am in the wrong place.... couldn't decide between inheritance, house buying, housing benefit help or perhaps another!

My husband and I are separated, live separately but are great friends.

I am self employed and receive working and child tax credits, housing and council tax benefit in the house that I am renting.

My husband is disabled and receives Disability Living Allowance, ESA, Housing and Council Tax Benefit in the house that he is renting. Our 14yo son lives with me.

Husbands mother and step father own a property (no mortgage) worth approx £125K. They have another son - they do not want this other son to inherit anything at all from their estate when they die. They are in the process of drawing up wills and are thinking about how to deal with their main asset (the house). They will stipulate in their wills that son no.2 and offspring get nothing.

Their intention is to leave the house to my husband and I (to do what we want with) and any other assets be divided between 4 grandchildren.

To make sure that their other son cannot make a claim on their estate (he will try to), they are thinking of transferring the house into my husband's name with a life interest for his mum & stepdad now rather than when either of them dies.

My questions are:-

1. How will this effect my husbands benefits if the house is transferred to him now? I understand that it won't effect his DLA, but not sure about ESA and HB & CTB. He will effectively own a house that he doesn't live in, but won't make any money from it until both of his parents pass away - at which time, it is his intention to move into the house anyway (and not sell it).

2. If they do not transfer the house now, and make a will leaving the house to my husband with a life interest for the surviving parent, the questions remain the same as those raised in question number 1.

3. Would he be better off receiving the house only on the death of BOTH parents, at which time he would move into the house.

4. Is it overcomplicating matters if they transfer the house to me now, with a life interest for both parents until such time as they died and then my husband inherits the house - is that even feasible? And again, would that effect my benefits?

I have done a good job of confusing myself, so my apologies if I have confused you also!

In a nutshell, what's the best way to deal with the house so that my husband can move in on the death of both of his parents without the complication of his brother trying to make a claim?

Thank you in advance (also posted in house buying forum)

Heffi1

That is a really complicated scenario, not sure why they would want to disinherit the other son, but he may try to come after what he thinks is his right, so that needs to be looked into very carefully or it could be overturned on their death(s)

If it were me in this situation, then I would be taking legal advice and having someone qualified outlining all of the pros and cons just in case and then make a decision based on all of the facts of the case, you don't want to make a decision now, and then find it is not valid when the time comes.

First step, get a solicitor to advise you properly.

xylophone

It is essential that you obtain qualified legal advice, and even then be prepared for the disinherited brother to contest the will.

I knew of a case where a disabled mother and her daughter were tenants-in common of a property - the mother's will ( properly drawn up by a solicitor) left her share to the daughter who had taken care of her for many years.

The son and daughter were named as joint executors.

On the mother's death, the son immediately entered a caveat so that probate could not proceed.

I don't know what happened in the end, but the parents would be well advised to make it very clear in their will why they are disinheriting their son in favour of his brother and the brother's (more or less) ex- wife?

rogerblack

MightyMousesMum wrote: »

My husband and I are separated, live separately but are great friends.

Here is the first possible issue.
Doing anything 'unusual' as a separated couple raises the issue of if you are living together.
This can be legally the case if it's believed you have not split up - but are merely living apart, and believed likely to move back in together at some points.
This can be both a problem for your tax credits, and his ESA/HB.

I am self employed and receive working and child tax credits, housing and council tax benefit in the house that I am renting.

My husband is disabled and receives Disability Living Allowance, ESA, Housing and Council Tax Benefit in the house that he is renting. Our 14yo son lives with me.
1. How will this effect my husbands benefits if the house is transferred to him now? I understand that it won't effect his DLA, but not sure about ESA and HB & CTB. He will effectively own a house that he doesn't live in, but won't make any money from it until both of his parents pass away - at which time, it is his intention to move into the house anyway (and not sell it).

2. If they do not transfer the house now, and make a will leaving the house to my husband with a life interest for the surviving parent, the questions remain the same as those raised in question number 1.

3. Would he be better off receiving the house only on the death of BOTH parents, at which time he would move into the house.

4. Is it overcomplicating matters if they transfer the house to me now, with a life interest for both parents until such time as they died and then my husband inherits the house - is that even feasible? And again, would that effect my benefits?

I am not addressing the 'what if the brother challenges' - which is a vital and important part.
1 - In principle, he could be found as owning non-exempt capital - the value of which would be the value of the property with the sitting tenants - including the costs of evicting them. This may wipe out means tested benefits.
2 - If the other parent has a life interest, then the capital value of the house may be zero, if they are not willing to sell. This would mean there is no affect on means tested benefits.
3 - this would make it simpler, though may complicate the issues around the will.
4 - as I understand it - you would be giving away with no legal requirement to do so on the death of the parents - this may disqualify you from means tested benefits as you may be held to still have the capital.

As I understand it - with universal credit, capital in excess of 16K will have effect in a way it does not now on tax credits, and will basically eliminate them for you.
4 also raises the 'living together' issue strongly.

On writing this, I vaguely remember there is 'it can't be capital if there is a very old or disabled relative living in it' rule in ESA capital regulations.
In addition - care home costs vastly complicate this.
While the stated aim is to stop the evil twin getting their hands on the money - it could look to care home funders like they are attempting to remove any chances of being able to pay care home fees.

Unfortunately, you actually need a lawyer.
One that understands the interaction of Wills, means tested benefits - including universal credit and possibly trusts too.

The very simplest route that probably doesn't need a lawyer (at least from the benefit side) would be for him to - on the death of the first parent - move into the house, and be given a part interest.

BigAunty

You need to understand the potential risks and issues that can result if the property is transferred into your names if they ever need a residential care home or apply for means tested benefits. To understand the issue with them gifting their property, suggest you both read the fact sheets on this topic of deprivation of assets/care homes, on the Age UK website.

I would seek legal advice about how strong a will is - it may be sufficient to draw up a professional, properly witnessed will that makes it highly unlikely that it could be successfully challenged by your ex's brother.

Can the brother in law even afford such a costly process such as challenging a will?

You should also raise the topic of your proposed 'life interest' arrangement whereby you own the property and become the landlords of the former owners on the housing forum. They will be able to advise you of your legal responsibilities as landlords (such as paying for repairs) and the risks and issues that we regularly see on the forum from when this arrangement has gone badly wrong.

I feel you are also confusing income and capital when it comes to the impact of the property transfer on your ex's benefits. Yes, there will be no income, assuming that his parents continue to live there rent free.

However, capital could perhaps be taken into account and wipe out his entitlement to means tested benefits like housing benefit, council tax benefit, income based ESA. There are a few exceptions in receiving HB where the recipient isn't impacted if they do not owner-occupy a property (such as a lone parent moving out of the marital property after a relationship breakdown and it is up for sale). However, there is a poster called Housing Benefit Officer who would be able to confirm whether or not the proposed transfer will affect you both.

helping_hand2014

if it was my mum and dad i would tell them to sell it and live life to the full enjoy the years they have together after all they paid for it

specialboy

I have read somewhere on this site that in cases like this it's best for the parents to leave a small amount (£100) to the son they don't wish to inherit a full share and include a letter explaining why, this can stop any claim by him on the rest of the estate.

rogerblack

helping_hand2014 wrote: »

if it was my mum and dad i would tell them to sell it and live life to the full enjoy the years they have together after all they paid for it

I agree wholeheartedly - if the one son was fit.

If you have one fit and healthy son, and one who has a serious lifelong medical condition and is likely never to be able to work for example - then things get a bit more muddy.

'Let them stand on their own too feet' doesn't quite work when they don't have legs.