Deprivation of Capital - how does inheritance affect Benefits ?

2012member

Asking on behalf of my friend & I'm unable to find out information......

My friend (lives alone) is on Benefits (ESA & DLA) with no other income and is due for an inheritance of £25k+ once property in probate is sold. They intend to use inheritence to pay off part of mortgage capital - is this classed as Deprivation of Capital ?

goo gle search brings up "decision makers guide volume 9 chapter 52 " 180 of conflicting information.
Guides looked at 52387 52843 52539 52541 52548 52833 52834 52846


Also mums net legal matters 906145 inheritance and income support dated 11/03/10 by war1 , written by Lynne Bradley , solicitors at Wrigleys indicates that inheritance can be used to pay off mortgage (also essential home improvements - with receipts ) .



:j:j

Droopydrawers

Is This contribution based ESA or Income Related ESA
There are differences for each

GirlFromMars_2

As I understand it, paying off a debt that is not due, is Deprivation of Capital, even a mortgage.

DLA/PIP would be unaffected as these are not income related benefits.

ESA would only be affected if it is Income Related. As she lives alone she probably gets an income related top up at the very least.

Contributions Based ESA would not be affected.

She could write to the DWP now to find out whether paying off the mortgage would be considered DoC or not.

TELLIT01

Good advice from GirlFromMars. Once there is a reply in writing your friend will know exactly what the position is.

System

i paid of my morgage with money from a life insurance (endowment) but it was a joint policy and i was the other

payment was 40k and the mortgage to clear was £29k was left with £11k to pay of credit cards etc,that took me down to under £6k

at the time i was on Income support and notified the DWP it did not affect my payments,actually they were very helpful

tell your friend to notify them it really is not worth not declaring

GirlFromMars_2

bournemouth_bell wrote: »

i paid of my morgage with money from a life insurance (endowment) but it was a joint policy and i was the other

payment was 40k and the mortgage to clear was £29k was left with £11k to pay of credit cards etc,that took me down to under £6k

at the time i was on Income support and notified the DWP it did not affect my payments,actually they were very helpful

tell your friend to notify them it really is not worth not declaring

I'd be really delighted to hear the DWP are letting people pay mortgages as standard! Hopefully the OP's friend will get a positive response from a Decision Maker as well.

Like you the DWP Decision Maker was really helpful when I was making a similar decision. It's definitely worth writing to them in advance of a potentially life changing decision to make sure you understand the rules and the implications of your decision.

TELLIT01

Paying down a mortgage from an endowment policy is one thing, endowment policies are often taken out for that precise purpose. Paying off credit cards is a very different matter. Most Decision Makers I've known would definitely consider paying off credit cards, when it is not necessary, as deprivation.

System

TELLIT01 wrote: »

Paying down a mortgage from an endowment policy is one thing, endowment policies are often taken out for that precise purpose. Paying off credit cards is a very different matter. Most Decision Makers I've known would definitely consider paying off credit cards, when it is not necessary, as deprivation.

i must have had a sympathetic decision maker, he also let me pay back a dwp loan and got some home improvements done

my experience was very positive op

Anagran

TELLIT01 wrote: »

Paying down a mortgage from an endowment policy is one thing, endowment policies are often taken out for that precise purpose. Paying off credit cards is a very different matter. Most Decision Makers I've known would definitely consider paying off credit cards, when it is not necessary, as deprivation.

Really? I am very surprised by this. I would have thought if you had credit card debt of say £15K and then inherited £15K that you would be able to clear the debt without it being considered a deprivation. After all if you have £15K of debt and £15K of cash, surely in reality you actually have £0, so have nothing to get rid of. I would also think that paying off credit card debt is absolutely necessary in almost all cases if you have funds available to do so. I am no expert of course, just my thoughts.

rogerblack

Anagran wrote: »

Really? I am very surprised by this. I would have thought if you had credit card debt of say £15K and then inherited £15K that you would be able to clear the debt without it being considered a deprivation. After all if you have £15K of debt and £15K of cash, surely in reality you actually have £0, so have nothing to get rid of. I would also think that paying off credit card debt is absolutely necessary in almost all cases if you have funds available to do so. I am no expert of course, just my thoughts.

If you have 15K of debt, and 15K of cash, from a benefits law point of view, you have 15K of cash.

Unless the creditor is immediately requesting repayment of the whole amount.

Caselaw has developed to expand this so that if you are paying a ridiculously high amount in interest, or have a very high minimum payment, it may be OK to pay it off.

If, for example, you become entitled to 90 pounds a week in benefit by paying off a loan, when you would otherwise pay 180 pounds a week in interest, for example.

Exactly what DMs consider reasonable varies widely unfortunately.
There have been reports of some asking for grocery receipts, and others accepting a lifetime holiday at disneyworld for the family.

As a most general point - if you have a relative who is intending to leave you money, and for various reasons, you are on means-tested benefits with debts or other obligations - if they leave the money directly to your creditors so it does not pass through your hands - that is entirely permitted.

(varying a will so as to do this is not, and is benefit fraud)

pmlindyloo

I find it quite bizarre that for HB and CT support the rules are different
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/365783/hbgm-bp1-assessment-of-capital.pdf

P1-703

after all that is a means tested benefit too.

In theory you could lose your ESA but still get HB and CT support if you spent your inheritance repaying mortgage etc etc