Housing benefit with inheritance

Housing_Benefit_Officer

He doesn't own a third of a house at the moment so for benefit purposes if he moves to private rented and claims housing benefit we don't need to know. Once the property has been sold and the executor then splits the estate between beneficiaries that is when his benefits will stop.

GirlFromMars_2

Your brother needs to start thinking about what he wishes to do after he receives the money.

It is important to find out if his ESA award is Income Related or Contributions based, as Income Related benefits will be affected by an inheritance of this nature.

Housing Benefit can be awarded until he receives the inheritance, after that it depends on what he intends to do with the money.

If he intends to purchase a property to live in (and is actively purchasing a property) then the money set aside for that purchase can be ignored for HB purposes for 26 weeks or longer if appropriate.

If he doesn't intend to purchase a property to live in then all of his Income Related benefits (including Housing Benefit and maybe ESA) will stop and he will be expected to live off the money until it falls below the thresholds for Income related benefits. (He cannot just give away money or purchase unnecessary items to bring him down below the thresholds!)

As he is disabled and if he wishes to buy a property it may be worth looking into the benefits of shared ownership property, instead of buying outright (unless it's a large enough inheritance that he won't have to worry about money again) There are housing associations set up for people with disabilities that include maintenance and repair of the property as part of the rental portion of the property. This can be paid for by Housing Benefit if appropriate.

Please talk to your brother about what he wishes to do after he has the money. If he wishes to move into a permanent rented property that can be done now without too much disruption. But what if he wants to buy a property for himself? Moving now would mean dealing the stress of moving twice as well as buying a home for himself. Also not knowing the nature of his disability I don't know how difficult finding an accessible rental property (who take housing benefit) would be for him, or how much stress moving/buying/moving would cause. It may be worth weighing the disruption to his life against the interest accrued to the estate. Are there any other options for temporarily housing him once the inherited property has sold?

Incidentally if you own a property and a disabled close relative continues to live at the property it would be disregarded for benefit purposes so if yourself or your sister needed to claim Income Related benefits the property would be disregarded if your brother continued to live there (I'm guessing this doesn't apply in your case, but the next person who searches this topic may find this useful!)

Edited to correct errors!

ETA - If your brother intends to use his inheritance to buy a property and wishes to continue to claim means tested benefits in the future he should write to the DWP so that a Decision Maker can decide whether what he is planning to do is Deprivation of Capital or not. Once a Decision Maker has made a decision he will then be able to move forward without worrying that his benefits may be stopped due to DoC rules.

Mojisola

GirlFromMars wrote: »

Housing Benefit can be awarded until probate is granted and he has the inheritance, after that it depends on what he intends to do with the money.

HB will be awarded until he actually has the money which can be a long time after probate is granted.

racon

Mojisola wrote: »

HB will be awarded until he actually has the money which can be a long time after probate is granted.

Hey, I agree entirely. There is no change of circumstance that requires the council/DWP or HMRC to be notified of a possible inheritance UNTIL the money hits the beneficiary's bank account. Anything can happen between Probate and distribution. Dealing with Probate can be up to 12 months - even a lot longer in some cases. I have just sorted out a simple estate (cash/shares/bonds & property) - just over 12 months from date of death and 11 months from date of Probate. I am completing the accounts and once they are signed a distribution will take place. I anticipate that will take at least another 6/8 weeks to finalise. There has been no interim distribution simply because both beneficiaries are receiving means tested benefits.
They will have both been able to claim all of their benefits for nearly 14 months after death. It gave them time to sort out their financial affairs.

racon

GirlFromMars wrote: »

Your brother needs to start thinking about what he wishes to do after probate is granted.

It is important to find out if his ESA award is Income Related or Contributions based, as Income Related benefits will be affected by an inheritance of this nature.

Housing Benefit can be awarded until probate is granted and he has the inheritance, after that it depends on what he intends to do with the money.

If he intends to purchase a property to live in (and is actively purchasing a property) then the money set aside for that purchase can be ignored for HB purposes for 26 weeks or longer if appropriate.

Hey, I thought that it was clearly deprivation if you use an inheritance to buy a property to live in. If what you say is correct and I am wrong, does this not lead to a massive loophole? Everybody that receives an inheritance or wins on the lottery could put all but £6000 of the money into a property and make it impossible for the DWP/council to treat it as capital?

I only mention that as I was asked recently by a beneficiary if they could put an inheritance into a property to live in AND still claim all of their benefits. I said No Way!!! That is deprivation. The intent is clearly to get round the deprivation rules. The individual lives in a private let 2 bed flat, and the inheritance could easily buy a nice 3 bed detached property outright in a nice area.

GirlFromMars_2

Mojisola wrote: »

HB will be awarded until he actually has the money which can be a long time after probate is granted.

Thanks! I should probably edit!

Mojisola

racon wrote: »

Hey, I thought that it was clearly deprivation if you use an inheritance to buy a property to live in. If what you say is correct and I am wrong, does this not lead to a massive loophole? Everybody that receives an inheritance or wins on the lottery could put all but £6000 of the money into a property and make it impossible for the DWP/council to treat it as capital?

I only mention that as I was asked recently by a beneficiary if they could put an inheritance into a property to live in AND still claim all of their benefits. I said No Way!!! That is deprivation. The intent is clearly to get round the deprivation rules. The individual lives in a private let 2 bed flat, and the inheritance could easily buy a nice 3 bed detached property outright in a nice area.

You should check your facts before you give advice.

If you come into money and buy a property to live in, it does not affect means tested benefits.

GirlFromMars_2

racon wrote: »

Hey, I thought that it was clearly deprivation if you use an inheritance to buy a property to live in. If what you say is correct and I am wrong, does this not lead to a massive loophole? Everybody that receives an inheritance or wins on the lottery could put all but £6000 of the money into a property and make it impossible for the DWP/council to treat it as capital?

I only mention that as I was asked recently by a beneficiary if they could put an inheritance into a property to live in AND still claim all of their benefits. I said No Way!!! That is deprivation. The intent is clearly to get round the deprivation rules. The individual lives in a private let 2 bed flat, and the inheritance could easily buy a nice 3 bed detached property outright in a nice area.

That was the wrong advice then I'm afraid. I was given the same advice by numerous benefits advisers and they were all wrong.

The correct advice (received from this forum) is that DoC cases are dealt with on an individual basis by Decision Makers. The only person who can decide on a DoC case is the Decision Maker, and they are the ones who need to be asked in a complicated case such as this.

In my case I wrote to the DWP and the Local Authority and laid out my position and was told by both that buying a property would not be DoC and I could use the money to purchase a property. If you want to read about my circumstances then have a look at my first post on the forum.

I am currently living in the property I purchased and in receipt of IR-ESA, Housing Benefit (it's shared ownership) and CTB with full knowledge of the DWP and LA of how I bought the property. While I was buying the property I was also in receipt of IR-ESA despite having well over £16K in savings, as the money was in my solicitors bank account, ready to buy the property, again the DWP were fully aware of the my capital and circumstances.

My advice would always be to write to the DWP in advance of buying a property don't make an assumption that it will be ok, but the DWP do let people buy property to live in.

I suspect if you already own an appropriate property and decide to upgrade to a mansion to continue claiming means tested benefits the DWP may look at things differently. But in this case the person is currently living in the property they are inheriting and it would be very unfair to prevent them from using the money to buy a new property just because their siblings also have an interest in the property.

GirlFromMars_2

racon wrote: »

Hey, I thought that it was clearly deprivation if you use an inheritance to buy a property to live in. If what you say is correct and I am wrong, does this not lead to a massive loophole? Everybody that receives an inheritance or wins on the lottery could put all but £6000 of the money into a property and make it impossible for the DWP/council to treat it as capital?

I only mention that as I was asked recently by a beneficiary if they could put an inheritance into a property to live in AND still claim all of their benefits. I said No Way!!! That is deprivation. The intent is clearly to get round the deprivation rules. The individual lives in a private let 2 bed flat, and the inheritance could easily buy a nice 3 bed detached property outright in a nice area.

There is of course a real world paradox at play here, in that you need quite a chunk of money these days to buy a property, so while you can do this with larger inheritances, people with an inheritance too small to purchase property will have no option but to live off it.

racon

GirlFromMars wrote: »

That was the wrong advice then I'm afraid. I was given the same advice by numerous benefits advisers and they were all wrong.

The correct advice (received from this forum) is that DoC cases are dealt with on an individual basis by Decision Makers. The only person who can decide on a DoC case is the Decision Maker, and they are the ones who need to be asked in a complicated case such as this.

In my case I wrote to the DWP and the Local Authority and laid out my position and was told by both that buying a property would not be DoC and I could use the money to purchase a property. If you want to read about my circumstances then have a look at my first post on the forum.

I am currently living in the property I purchased and in receipt of IR-ESA, Housing Benefit (it's shared ownership) and CTB with full knowledge of the DWP and LA of how I bought the property. While I was buying the property I was also in receipt of IR-ESA despite having well over £16K in savings, as the money was in my solicitors bank account, ready to buy the property, again the DWP were fully aware of the my capital and circumstances.

My advice would always be to write to the DWP in advance of buying a property don't make an assumption that it will be ok, but the DWP do let people buy property to live in.

I suspect if you already own an appropriate property and decide to upgrade to a mansion to continue claiming means tested benefits the DWP may look at things differently. But in this case the person is currently living in the property they are inheriting and it would be very unfair to prevent them from using the money to buy a new property just because their siblings also have an interest in the property.

Hey, Are you sure?
Taken from the Housing and Council Tax benefit regulations:




W1.714 The following are further examples of when a person may have deprived themselves of capital


• a lump sum payment has been made to someone else, for example as a gift, or to repay a


debt, but see Reason for disposing of capital asset later in this chapter


• substantial expenditure has been incurred on a non-essential item, for example on an


expensive holiday


• title deeds of a property, which is not the claimant’s home or will soon cease to be so


because, for example, they will be moving elsewhere, have been transferred to someone else

• money has been put into a trust which cannot be revoked
• money has been converted into another form which would fall to be disregarded, for
  example personal possessions
  • capital has been reduced by extravagant living, for example gambling, or used to provide
  a much higher standard of living than the claimant usually maintained
  W1.731 To decide whether securing entitlement to benefit was a significant purpose, you must establish whether the claimant has exercised choice when disposing of the resource. If claimants do no more than satisfy their need for one of the necessities of life, they have not exercised a real choice in the transaction.

I think that you will find that 'converting' cash into a dwelling for their own needs does count as deprivation. W1.731 most certainly applies to you as you wanted to get rid of the capital AND still be able to claim your benefits.


I don't get the fact that you suggest that it is OK to buy say, a £250,000 property to live in - being currently in rented accommodation, but not if you want to move from a £200,000 property you own to a £450,000 one?
What's the difference?