Deprivation of capital & universal credits

crispy_chris

Posting on behalf of a friend. 

Single parent of two young children. Been receiving UC for a few years since the divorce from their partner. 

Currently my friend lives in the marital home with a court order in place that they can live there with the children until the youngest reaches 18, at which point the house is sold and the equity split between them and their ex. 

My friend has come into some money due to an inheritance which has caused their UC to end. 

If my friend used this inheritance to buy their ex out of the house now, would that class as deprivation of assets and cause issues with UC going forward?

 Thanks for any advice. 

calcotti

There is no definitive answer. Each case is looked at individually and decided by a Decision Maker. The guidance simply says
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/890315/admh1.pdf

Deprivation of capital 
The law

H1795 The law says people are treated as having capital they do not have if they deprive themselves of capital to get UC or more UC1. The capital people are treated as having is called notional capital.

H1796 People are not treated as having capital of which they have deprived themselves if 
1. it reduces or pays a debt owed by the person or

2. they purchase goods and services and that expenditure was reasonable in the circumstances of that person’s case.

Have people deprived themselves of capital for the purpose of getting UC or more UC

Onus of proof

H1825 DMs have to show the claimant's or partner's purpose was to get UC or more benefit if they decide claimants or partners have deprived themselves of capital1. Getting UC or more UC may not be the claimant's or partner's predominant purpose but it must be a significant one. So when claimants give away all their capital to a relative just before claiming UC their

1. main, or predominant, purpose may be to benefit the relative and

2. intention, or significant purpose, may be to reduce their capital so they can get UC or more UC.

What the DM decides

H1826 DMs have to decide if the claimant's or partner's significant purpose was to get UC or more UC. The DM has to make such a decision each time claimants or partners deprive themselves of capital. So if a claimant has spent their capital on several things the DM has to decide the claimant's purpose for each act of deprivation.

H1827 Normally there is no direct evidence to show the claimant's or partner's purpose was to get UC or more UC. So the DM has to consider all the facts of each case when making the decision.

The dosument goes on to discuss more about what the ADM needs to consider.

tacpot12

I think it could be classed as a deliberate deprivation of assets. Your friend would need to make a case that it was reasonable for her to purchase her ex out of the house. It doesn't seem a necessary step, as she can live in the property for the moment, but it seems clear to me that she is purchasing the house is not to secure UC, but to secure her home for the long term, so that she does not have to move out when the youngest child reaches 18. I think this is reasonable and so it should mean that it will not be classed as a deliberate deprivation of assets.

It think it will be difficult to get a definitive decision on this ahead of her making the decision, and she will have to take a chance on it, and ultimately may have to appeal the DWP decision if it goes against her. All she can do when she claims UC again is to say that she bought her ex out so that she would continue to have a home after her youngest child reaches 18 and that she thinks this was a reasonable thing to do.

crispy_chris

Great, thanks for the info both of you

TELLIT01

It will certainly come down to a Decision Maker to determine whether or not it would classed as deprivation of capital.  The OP doesn't say what age the children are, but if the decision is made that purchasing the property now would be considered as deprivation of capital, they are probably putting the OPs friend into a position where they wouldn't have the money to purchase the property at a later date as they would have been using it for living expenses.  If the OPs friend lived in rented accommodation and wished to use the inheritance to purchase a property to live in there would be no problem.

pmlindyloo

Another useful quote from Calcotti's link:

H1842 Claimants or partners have not deprived themselves of capital for the purpose of getting UC or more UC if they
 1. say exactly what they are going to do with their capital and
 2. are told by an officer of DWP it will not affect the amount of UC they can get and
 3. do what they said they were going to do with their capital.

Your friend can contact Universal Credit and ask about this.  A decision maker will decide and write to your friend.

Is the house in joint names/tenants in common?

Who pays the mortgage and was this part of the divorce agreement?

Pok3mon

Seems unfair not to use the money to support herself and children while acquiring a substantial asset and expecting others to support her. Does the ex support his children? She will not be left homeless as she will still have half the asset when sold. Her future is already secured.

crispy_chris

pmlindyloo said:

Is the house in joint names/tenants in common?

Who pays the mortgage and was this part of the divorce agreement?

Apparently the house is tenants in common and the mortgage is paid entirely by my friend.

Pok3mon said:

Seems unfair not to use the money to support herself and children while acquiring a substantial asset and expecting others to support her. Does the ex support his children? She will not be left homeless as she will still have half the asset when sold. Her future is already secured.

You're right that she won't be homeless, it's just that there's a chance to buy out the ex now using this money. If my friend waits until the children are 18 (still some 15 years away) it will be a substantial amount more to buy out the ex's 50% split, which realistically will never happen. Therefore my friend will be forced to sell the house, pay off the ex with that money, and start again.

The ex does indeed support the children via child maintenance every month for what it's worth.

frayedknot

Can't see any problem myself. If she'd used it to buy a house outright it would be allowable.

poppy12345

frayedknot said:

Can't see any problem myself. If she'd used it to buy a house outright it would be allowable.

That's not for you or anyone else to decide, it's for a decision maker to decide.