Pension credit – inheriting second property abroad

Rich2808

My mother currently receives pension credit. She is about to inherit a property in Ireland from her brother – his house was his only asset. The property valuation for the estate is 50,000 euro and after solicitors fees/Irish inheritance tax/funeral costs the net benefit is around 38,000 euro.

She intends to sell the property but it could take time as it is in a rural area.

My question is really how is this translated into the assumed savings income for pension credit purposes:

Is it the net benefit she receives used for the calculation (i.e. 38,000 euro after fees/taxes/funeral costs) or the total property value of 50,000 euro
What conversion rate is used to translate it into sterling – is it a fixed reference date linked to the date of probate?
Is there a disregard period – I saw somewhere that a second property is disregarded for 26 weeks if there is an intention to sell it and it is unoccupied?

Any thoughts on this would be welcome. As her savings are below £10,000 and she gets full pension credit (including the disability uplift as she gets higher rate attendance allowance) I am assuming she would still qualify for some guaranteed pension credit?

Wizardly18

Any property here or aboard is normally required to be declared, so on that assumption, I'm guessing any actual property will effect entitlement.

Rich2808

Wizardly18 wrote: »

Any property here or aboard is normally required to be declared, so on that assumption, I'm guessing any actual property will effect entitlement.

I agree it will affect entitlement. It's really how it will that I am interested in - when it's an inheritance of a property outside the UK (E.g. valuation and currency conversion issues). While the DWP may be up to speed on UK prices how do they value properties abroad - probate value or current value and who does the valuation for them?

I assume the 26 week disregard is from the probate date or is it when the property deeds are transferred into your name.

TELLIT01

Any disregard would be from the date that ownership/title to the property legally transferred. What I'm not sure about is any period of disregard for a second property. There is a disregard period if the main residence is sold and the intention is to purchase another property, but that doesn't cover the situation here.
With regard to valuation, DWP will initially want to see evidence that the property is being marketed and would probably take the initial valuation from that. In the UK they can access Land Registry information for similar properties to get an approximate value.
There is a phone number for the Pension Service Help Line so it may be worth giving them a call to get some clarification.

lisyloo

Is there a property disreagard when one joint owner gains a property via survivorship (so no probate).

TELLIT01

lisyloo wrote: »

Is there a property disreagard when one joint owner gains a property via survivorship (so no probate).

If the property in question is the main residence it is permanently ignored. If you mean a second property then it should have been declared at the start of any Income Related claim anyway as it would be classed as capital.

antrobus

There is no upper capital limit for Pension Credit but you may receive a reduced amount if you have more than £10,000 of capital. For every £500 or part of £500 of capital over £10,000, you'll be treated as having 'deemed income' of £1 a week. This is added to any other income you have, such as a pension.

https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/how-your-benefits-are-means-tested/

EUR 38,000 is about GBP 33,000, so the deemed income would be GBP 46 a week.

The actual numbers will depend on how much is received when the property is sold and the estate distributed.

I believe that the there is a disregard which applies for 28 weeks or until the property is sold.

xylophone

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs48_pension_credit_fcs.pdf

Rich2808

There is also an extremely complex guide here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/687298/pension-credit-detailed-guide-pc10s.pdf

It explains the policy on overseas assets in detail:

Overseas assets
[Legislation 37a]
If your customer holds property or other assets outside the UK:
• the asset will be valued at its sale (or surrender) value in the country
of origin if there is no law to stop them transferring money from there
to this country
• the value of the property will be the sale value in the UK if your
customer is not allowed to transfer money from the country of origin to
the UK
In both cases:
• we will ignore 10% of the asset’s current market value if there are any
costs involved in the sale (for example, estate agents’ or
stockbrokers’ fees).
[Legislation 38]
• if the asset is held in a currency other than sterling, we will allow a
deduction for any banking charge or commission payable to convert
the currency to sterling
• we will deduct any outstanding debts or mortgages secured on the
assets

tboo

Rich2808 wrote: »

My mother currently receives pension credit. She is about to inherit a property in Ireland from her brother – his house was his only asset. The property valuation for the estate is 50,000 euro and after solicitors fees/Irish inheritance tax/funeral costs the net benefit is around 38,000 euro.

She intends to sell the property but it could take time as it is in a rural area.

My question is really how is this translated into the assumed savings income for pension credit purposes:

Is it the net benefit she receives used for the calculation (i.e. 38,000 euro after fees/taxes/funeral costs) or the total property value of 50,000 euro
What conversion rate is used to translate it into sterling – is it a fixed reference date linked to the date of probate?
Is there a disregard period – I saw somewhere that a second property is disregarded for 26 weeks if there is an intention to sell it and it is unoccupied?

Any thoughts on this would be welcome. As her savings are below £10,000 and she gets full pension credit (including the disability uplift as she gets higher rate attendance allowance) I am assuming she would still qualify for some guaranteed pension credit?

She may not have the capital counted if she has an Assessed Income Figure (AIF) period but please contact the pension service for guidance.

lisyloo

TELLIT01 wrote: »

If the property in question is the main residence it is permanently ignored. If you mean a second property then it should have been declared at the start of any Income Related claim anyway as it would be classed as capital.

It is no longer a main residence since the death.
The sole owner is permanently in a nursing home.

I cannot now remember why i asked becuase the pension credit unit said they would not take it into account initially but would send letters to get updates (the sole owner lacks capacity and no power of attorney is in place so it will take time as we need to apply to the court of protection which we will start after the funeral).