Inheritance and on ESA/PIP

getmore4less

GlasweJen wrote: »

This will need a lawyer. the will basically says 20% of her estate belongs to you, she wants her brother to hold it for you [decision maker would ask why, is it to allow you to keep claiming IB benefits], but her niece and nephew would inherit if you died.

Now if the money is yours then it should go to your estate upon death. It sounds like she wants her brother to be a trust holder without the legal set up and the DWP may or may not accept that.

You need a lawyer to ascertain if this is a trust, if the money is yours and to protect you should the brother run off with your £45K

ETA did a professional write this will?

Wills automatically create trusts.

I think the intent is fairly clear, although will need legal opinion on what type of trust has been created and how it should be taxed the OP is not the beneficiary of the capital.

A trust is created with 20% of the esate with the brother as trustee where the residual beneficiaries are the "nephew and niece X and X".

TELLIT01

missbiggles1 wrote: »

But surely that will count as additional income of around £60pw for means testing purposes?

I hadn't looked at it that way, but you are quite possibly correct.

With all the differing thoughts being posted on what it might mean, legal advice may well be required. My initial action though would be to inform ESA of the complete situation and wait for their decision. Once the OP has that decision it might inform them more on how they would need to proceed.
I certainly don't see any way ESA will completely ignore it.

getmore4less

I very much doubt this counts as income any more than £50pw from your mum would.

payments attributable to any interest earned would be income.

Torry_Quine

TELLIT01 wrote: »

If the OP only has access to the money at the rate of £1k every 4 months it would seem at first glance that there isn't any issued as it's unlikely to take savings to over £6k at any time.
The questions the Decision Makers will need to consider are whether or not the OP is the "beneficial owner" of the entire £45k, or if the codicil has been created specifically to enable the OP to continue to claim benefits.
From the comment in the OP which seems to connect the fact of being on benefits with the friend's codicil, that would appear to be a possibility.

It does look like that

missbiggles1 wrote: »

But surely that will count as additional income of around £60pw for means testing purposes?

That's what I wondered.

pmlindyloo

Yes, it would be interesting to see what the original will said about the inheritance and the time lines involved.

xylophone

The original will left the OP a straight 20% of the estate?

The testator feared that this could have a negative impact on any means tested benefits that the OP might receive and attempted to mitigate this by writing a codicil to limit the amount of capital that the OP could receive in any one year.

Is the codicil legally executed, (signed, dated and properly witnessed)?

If so, it would appear that a trust has been created and there may be tax considerations.


https://www.gov.uk/trusts-taxes/overview

http://findlaw.co.uk/law/estate_planning/trusts/500145.html

It is not a discretionary trust because the trustee (the brother), has no discretion. He is required to pay out the capital as directed until it is exhausted by disbursements to the OP or, if death supervenes, by disbursement of the remainder in equal shares to the testator's niece and nephew.

It is possibly a type of bare trust with a main and subordinate beneficiaries?

It may be that the capital is in a non-interest bearing account but should it be if the Trustee is taking proper care of the capital? And if it were in an interest bearing account, who is entitled to the income?

And with regard to the account in which the account is held, it should not be in an account in the brother's personal name because the money is not his - otherwise, if he were to die, the cash would fall into his estate.

This does not seem to have been thought through?

densol_2

Its still not clear if the OP is on income based or contribution based ESA. If its CB then all the above is not relevant regarding the benefit.

getmore4less

You can hold money in an account in your name where the beneficial interest is someone else's and it would not fall into your estate.

GlasweJen

A trust wouldn't normally be money kept in someone else's normal bank account.

If it isn't set up properly the DWP may not accept that this is a trust for a disabled person and would reduce any IB benefits accordingly.

Cheeky_Monkey

GlasweJen wrote: »

A trust wouldn't normally be money kept in someone else's normal bank account.

If it isn't set up properly the DWP may not accept that this is a trust for a disabled person and would reduce any IB benefits accordingly.

Have I missed something?