Inheritance and benefits

miyukimatsumoto

My cousin receives DLA and ESA for serious mental health issues. She lives with her mother and step dad. Her real father (my uncle) is an old man in pretty poor health and she is his sole heir. His house is worth about £120k and he has about £20k in premium bonds and the same in savings. She is worried that if she inherits all of this then they will cut all of her benefits off.

I've looked on government websites but can't find any info on this matter which is very frustrating!

Does anyone have any advice I can give her on this?

rogerblack

DLA will be unaffected - as will PIP - though there are being noises made about means-testing PIP which she will migrate to.

ESA will be unaffected by the house if she lives in it.
Any capital exceeding 16K will mean that she is not entitled to income-based ESA.
Was she working immediately before claiming ESA? (or IB)
Is she in the support group of ESA?
If both of these are true, she might be in the support group of contribution based ESA, and not affected by capital.

Properly set up trusts may be arranged to secure the capital in such a way that it can provide for certain needs while not being counted.
You need a lawyer that is actually experienced in benefit law and trusts.
An average trust may not do this - the cousin cannot have any way to get at the money.

In short - if she can get access to the capital, or sell the rights to the trust, it will usually count.
She cannot ever set this up herself - however it is legal if it is someone else doing it for her, with money that she does not control at the time.

Londonsu

Depending on he fathers age, circumstances and state of health there is a possibility that she may not inherit anything as he may have to sell his house if he has to go into a care home

poppasmurf_bewdley

miyukimatsumoto wrote: »

My cousin receives DLA and ESA for serious mental health issues. She lives with her mother and step dad. Her real father (my uncle) is an old man in pretty poor health and she is his sole heir. His house is worth about £120k and he has about £20k in premium bonds and the same in savings. She is worried that if she inherits all of this then they will cut all of her benefits off.

I've looked on government websites but can't find any info on this matter which is very frustrating!

Does anyone have any advice I can give her on this?

Why on earth would she be worried about losing benefits if she has £160k in the bank?

rogerblack

poppasmurf_bewdley wrote: »

Why on earth would she be worried about losing benefits if she has £140k in the bank?

Why on earth would people due to pay inheritance tax plan to minimise that ?
If essentially all of the current crop of politicians utilise estate planning and other techniques to minimise their tax payments - why should it be wrong for the claimants?

Plus 'serious mental health issues' - having several years off benefits is of course in principle a good thing.
Until it comes time to go back on benefits - at which point any spending over what is 'justified' and 'reasonable' may lead to you not being entitled to benefits.

It can result in instead of being a welcome windfall, being something that in no way helps your standard of living, risks financial ruin due to either mismanaging due to mental problems, or being assessed as having behaved unreasonably and still having the money, leading to at best an extended period without benefits - or the obvious possible consequences if someone with severe mental issues is faced with being told that they're getting no money for 3 years due to being assessed as behaving unreasonably.

evenasus

poppasmurf_bewdley wrote: »

Why on earth would she be worried about losing benefits if she has £140k in the bank?

rogerblack wrote: »

Why on earth would people due to pay inheritance tax plan to minimise that ?

Inheritance tax, is the government 'taking' a persons earnings/savings that they have already paid tax on twice. Income tax on their salary and income tax on their savings interest.

Benefit money, is the government 'giving' money to someone.

TELLIT01

The property would be disregarded for a period even if your cousin isn't living in it to allow time for the property to be sold (if she doesn't live there or intend to move in soon). The 20k of premium bonds and 20k savings will be taken into account and she would lose entitlement to Income Related benefits such as ESA (IR). She would be entitled to claim again once her total assets dropped below the £16k upper limit.

pmlindyloo

rogerblack wrote: »

DLA will be unaffected - as will PIP - though there are being noises made about means-testing PIP which she will migrate to.

ESA will be unaffected by the house if she lives in it.
Any capital exceeding 16K will mean that she is not entitled to income-based ESA.
Was she working immediately before claiming ESA? (or IB)
Is she in the support group of ESA?
If both of these are true, she might be in the support group of contribution based ESA, and not affected by capital.

Properly set up trusts may be arranged to secure the capital in such a way that it can provide for certain needs while not being counted.
You need a lawyer that is actually experienced in benefit law and trusts.
An average trust may not do this - the cousin cannot have any way to get at the money.

In short - if she can get access to the capital, or sell the rights to the trust, it will usually count.
She cannot ever set this up herself - however it is legal if it is someone else doing it for her, with money that she does not control at the time.

See bolded.

More information/links please. Where di you hear this/read about it?

xylophone

It may be that a trust for a vulnerable person can be created but expert legal advice would be required.

Example http://www.pickupandscott.co.uk/vulnerable_person.php

miyukimatsumoto

rogerblack wrote: »

DLA will be unaffected - as will PIP - though there are being noises made about means-testing PIP which she will migrate to.

ESA will be unaffected by the house if she lives in it.
Any capital exceeding 16K will mean that she is not entitled to income-based ESA.
Was she working immediately before claiming ESA? (or IB)
Is she in the support group of ESA?
If both of these are true, she might be in the support group of contribution based ESA, and not affected by capital.

Properly set up trusts may be arranged to secure the capital in such a way that it can provide for certain needs while not being counted.
You need a lawyer that is actually experienced in benefit law and trusts.
An average trust may not do this - the cousin cannot have any way to get at the money.

In short - if she can get access to the capital, or sell the rights to the trust, it will usually count.
She cannot ever set this up herself - however it is legal if it is someone else doing it for her, with money that she does not control at the time.

She has never worked as she got ill just after she started university when she was 19. She is 32 now. She is in the support group as she can't deal with any social situation outside the home that involves people. She is quite high-functioning as she can care for her own hygiene needs and dress herself but the future worries her greatly. Although her father is ill, he's pretty independent and hopes not to go into a care home, though I suppose that if he did she could use the savings first, then sell the house if she needed to ( or have someone sell it for her).

If I hadn't come on here I would have no idea of any of this. No benefits or government websites have anything on this. Surely they should? Anyway, thanks for all answers so far, people.

rogerblack

pmlindyloo wrote: »

See bolded.

More information/links please. Where di you hear this/read about it?

This is not near-term.
However, it seems extremely unlikely that in the long term that - if the conservatives get in - they will not consider several things in the guise of 'fiscal responsibilty', 'targeting the help at those that need it most', ... (increase the help for those that need it most by 3%, while removing entitlement to 20% or more)

Migrating the 'legacy' caseload of DLA claimants (over 65 at introduction of PIP), over to PIP. (Saving 40% or so) (More than the working age population, due to the high fraction of people assessed as mobility impared but now over 65).
Taxing PIP/DLA.

Unifying the disability test in UC and PIP/DLA, and making - at least working age - PIP just another component in UC.

'Universal' non-means tested benefits do not seem very in-tune with conservative thinking.
Similar noises are being made about the winter fuel payment for older pensioners.

http://www.independent.co.uk/news/uk/home-news/iain-duncan-smith-wants-to-tax-disability-benefits-9775338.html

http://www.thesundaytimes.co.uk/sto/news/Politics/article1467421.ece