Inheritance and benefits

HansB

Hi, I’m new to this so sorry if I am posting in the wrong place. What I want to know is, when we get an inheritance, do we have to declare it to the DWP? I get PIP as I have a lot of health problems, but also universal credit (LCWRA) due to not being able to work. When we get the inheritance, lets say its £100k from the sale of the bungalow, it will be used straight away to pay off the majority of our mortgage so we wont be living off any of the money and will still need my benefits to live off. Do I have to inform the DWP or will it be seen as a ‘deprivation of assests’ if we clear it on our mortgage. I really am confused as I certainly dont want to be committing benefit fraud, but like I say, we wont actually have any money that we’re living off. Can someone plz advise. Thanks.

Spoonie_Turtle

You definitely have to tell them either way. However someone more knowledgeable and experienced than I should be able to answer the 'deprivation of assets' part of your question.

If you don't declare and then they find out, you'll be in a world of trouble *even if* at the end of their investigation it turns out using it to clear your mortgage is fine. You don't want them to stop your UC while they investigate, as you say you won't have the inheritance money to live on and although it shouldn't affect your PIP (not means-tested) I doubt that would be enough for you to live on while you wait.

HansB

Thank you Spoonie Tu, I thought that too. I would rather be honest with them, lose my benefit money if thats what they do, but then fight to get it back if I am still entitled to it.

Owain_Moneysaver

Yes, you have to declare it to DWP - assuming your Universal Credit is income-related (not contributions-based). PIP is not income-related so is not (and will not be) affected.

Also, paying off debts which you don't have to repay immediately may be deprivation of assets. You'd normally be expected to continue paying off debts at the usual rate, and your living expenses, out of the inheritance and not to claim benefit. This might not apply to mortgage payments, though.

You might need to obtain specific advice for your circumstances from a solicitor or advice agency specialising in benefits.

You should also declare this to DWP immediately and not wait for a house to be sold or the money to actually be paid to you. I think DWP may consider you were entitled to the money at the date of death and this may have given rise to a benefits overpayment which would have to be repaid when you finally get the inheritance.

Edit: some of the following posts clarify the above general points.

poppy12345

Owain_Moneysaver wrote: »

Yes, you have to declare it to DWP - assuming your Universal Credit is income-related (not contributions-based). PIP is not income-related so is not (and will not be) affected.

Universal credit is a means tested benefit, it's not possible for UC to be contributions based.


Others more knowledgeable than me will be able to give specific answers about deprivation of capital and UC.

HansB

Thank you Owain, I appreciate your input, I will bear that in mind.
Our mortgage still has 20 years ish left on it so we dont want that hanging over us when my husband has retired. I personally think its the most obvious thing to do. When people have lottery wins etc, they pay off mortgages, car loans, debts etc, so I dont think that is depriving yourself, it’s helping your life out. That is just my opinion though.

calcotti

Under UC you are allowed to pay off debt without it being treated as deprivation of capital. When you receive the capital you will need to tell DWP but if you spend it within the same UC assessment period it should, in theory, make no difference. If the money is in your account at the end of an assessment period it will be taken into account, which will end your UC entitlement if the amount is over £16,000. Once you have spent it you will be able to claim UC again.

However the paying off of debt not being treated as deprivation of capital is a change from previous benefits. You may therefore wish to get advance confirmation from DWP that they will not treat it as deprivation of capital.

You can refer them to The Universal Credit Regulations 2013 regulation 50 (2)a

Notional capital

50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.

(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—

(a) reducing or paying a debt owed by the person; or

(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

(Note: in a previous thread, which I can’t currently find, others have disagreed with me on this. Under rules for old benefits it would likely have been treated as deprivation of capital.)

HansB

From my understanding then, if I was to get this money, pay off my mortgage, I would lose my UC which is ok, I would still keep my PIP. Looking up a deprivation of capital by paying off a mortgage states that you would potentially be depriving yourself in order to claim more in benefits. This wouldnt be my case at all as I cant claim anymore on PIP anyway.

calcotti

Owain_Moneysaver wrote: »

I think DWP may consider you were entitled to the money at the date of death and this may have given rise to a benefits overpayment which would have to be repaid when you finally get the inheritance.

This is a good point to raise. There is guidance here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778104/admh1.pdf
See paragraphs H1169 to H1178.
I confess however that I’m not sure what they mean in practice!

calcotti

HansB wrote: »

From my understanding then, if I was to get this money, pay off my mortgage, I would lose my UC which is ok, I would still keep my PIP. Looking up a deprivation of capital by paying off a mortgage states that you would potentially be depriving yourself in order to claim more in benefits. This wouldnt be my case at all as I cant claim anymore on PIP anyway.

Where have you looked up rules about deprivation of capital? Are you sure the advice relates to UC? The regulation I have quoted specifically states that paying off debt is not to be treated as deprivation of capital for UC.
Capital has no impact on PIP whatsoever as entitlement is based solely on the impact your health has on your ability to do things - it is not means tested.

HansB

Thank you everyone for your replies, I really do appreciate it. I think that when the time comes, I will tell the dwp what we get and let them decide what they want to do with my benefits. I would rather be open and honest then cant get into trouble for anything.