Divorce settlement

DivorcedOne

Before I say anything else, I’m not looking to commit fraud or try to hide anything.

I am currently receiving tax credits, child benefit, PIP and ESA (I believe I receive high rate ESA) 
My solicitors have recently heard from the bailiffs that they have received some money towards my divorce settlement. It’s a substantial amount. I know it will force me off my benefits, which I wholly understand.

what I am looking for advice with is, if there are any items I can purchase that wouldn’t be seen as excessive spending.

i have 6 children, and my old mini bus is on its last legs (I was going to speak to my parents about a loan) if I bought a new (second hand) bus would it go against me? 

We haven’t bought new furniture in some time and I could do with a new bed/sofa etc, but don’t want to spend any of the money if it will go against me with future claims? 

I would love to pay off my debts, but someone has told me that debts are not counted towards spending lump sums.
I would also like to put some money in trust for my children, my ex was highly abusive to both myself and the children, I would like this money to help them out as well, but appreciate it might not be possible.

I’m really just looking for some advice, I never expected him to pay anything and had expected it to go down the route of a pension sharing order, could I create a pension for myself? 

At present he pays nothing in maintenance and has a huge debt owing to me there as well.

thank you for any advice

poppy12345

Savings of more than £16,000 will stop all means tested benefits, which include Income Related ESA, housing benefit (if you claim this) and council tax reduction. Once the money goes into your bank then you'll need to report the changes.

If any part of your ESA is contributions based then this will continue (£113.55 per week)

PIP is not affected and neither is tax credits.

Paying off debt when claiming the old benefits is seen as deprivation of capital and you will still be classed as having that money. Replacing old furniture is allowed providing you don't buy the most expensive things. Also buying a newer vehicle is fine, providing you don't buy the most exepnsive one. Giving your money away to others is also deprivation of capital.

Once your savings go below £16,000 then you can reclaim the benefits but whether you can reclaim the ESA is another matter and you may have to claim UC.

calcotti

PIP is not affected by capital.

if your ESA is partly contribution based then that part of the award is unaffected by capital. (There is no such thing as higher rate ESA - I assume you mean that you are in the Support Group). Ifyou do not know the basis for your ESA you need to find out. If you have been living with a partner who has been working it is likely that the ESA is contribution based.

Child Benefit is unaffected by capital.

Tax Credits are also unaffected by capital although interest on the capital over £300 is taken into account. 

There are no fixed rules for what is allowable for spending. Spending money that is “reasonable in the circumstances” is fine. Replacing worn out household goods will be reasonable. Replacing a vehicle may also be reasonable. Whatever you do document the goods you are replacing and your new purchases so that you can provide evidence of how the money has been spent if required to do so.

Paying off debt is always allowed for Universal Credit but may not bed or (income based) ESA.

Giving money to your children will be deprivation of capital - you will be treated as if you still have that money.

DivorcedOne

I should have said I live in Scotland, I am a single parent. 

I do get housing benefit and council tax benefit.
I am in the support group for ESA I don’t have to look for work, I think it’s DLA I get along with it. 

So I won’t have to contact tax credits or Child benefit when/if I get this money? 

I am sceptical about it actually paying out as he constantly claims he has no money 

poppy12345

Whether it's PIP or DLA that you're claiming they won't be affected. You need to find out exactly whether part of your ESA is Contributions based or not.

calcotti

DivorcedOne said:

I should have said I live in Scotland, I am a single parent. 

I do get housing benefit and council tax benefit.
I am in the support group for ESA I don’t have to look for work, I think it’s DLA I get along with it. 

So I won’t have to contact tax credits or Child benefit when/if I get this money? 

I am sceptical about it actually paying out as he constantly claims he has no money 

You really need to get clear exactly what benefits you are receiving.
You will likely lose HB and CTR. If the ESA is a mix of contribution based and income based then the amount you receive would drop to just the contribution based part.
if you need to claim help with rent again in the future you would need to claim Universal Credit.

DivorcedOne

It is ESA I get, but when I was awarded PIP my rate went up. I don’t work so am fairly sure it’s income based, but I’ll need to call them anyway, so will find out then.

I don’t have to contact them all until the money hits my bank account do I? 

I had a feeling it would need to be universal credit instead of ESA.

I know Legal aid will take something off it too as I was awarded that when I went to the solicitors

calcotti

DivorcedOne said:

It is ESA I get, but when I was awarded PIP my rate went up. I don’t work so am fairly sure it’s income based, but I’ll need to call them anyway, so will find out then.

I don’t have to contact them all until the money hits my bank account do I? 

I had a feeling it would need to be universal credit instead of ESA.

I know Legal aid will take something off it too as I was awarded that when I went to the solicitors

When you got PIP, if you are living alone, you would have become eligible for the Severe Disability Premium to increase the amount of income based ESA you get. 
Were you working in either of the two years before you claimed ESA, or were you previously getting Incapacity Benefit? If so you could possibly be getting some contribution based ESA. Whether or not you work now is not relevant.
You will need to notify benefits departments when you receive the money. The benefits affected by the capital. When the capital drops below £16,000 you will be eligible to claim Universal Credit. If you have used some of the capital to pay off debt this will not affect UC. Note that if you do claim UC in the future this will end your Tax Credits so it will be wise to do a full benefits comparison before starting a claim.

DivorcedOne

No I was only ever on ESA, and sending sick notes in. I never received incapacity benefit.

I will most likely need to go onto universal credit as I’ll need to claim for housing and council tax benefit, which I believe I can only do through universal credit now

poppy12345

DivorcedOne said:

No I was only ever on ESA, and sending sick notes in. I never received incapacity benefit.

Part of it could still be Contributions based if you were working and paid the NI contributions in the 2 years before your claim started.

calcotti

DivorcedOne said:

No I was only ever on ESA, and sending sick notes in. I never received incapacity benefit.

I will most likely need to go onto universal credit as I’ll need to claim for housing and council tax benefit, which I believe I can only do through universal credit now

That is partially correct - any future claim for help with rent would be through UC. Council Tax Reduction is completely separate from all other benefits.