How receiving an inheritance might affect benefits

matt.d.

Hi everyone - I'm wondering if anyone can give any guidance or clarification on a family situation that may develop.

An elderly relative is currently changing their will to leave their estate to the desired beneficiaries and this could result in one family member receiving a substantial amount. For argument's sake let's say that is £75k. That family member is married with 3 kids and as a family they currently receive income support (not Universal Credit) and live in a privately rented property.

The person making the will would obviously want the inheritance to make a difference to their situation and, if possible, use towards a deposit on a home. However, it has come up in conversation that such an inheritance could limit their benefits claim and thereby force them to dip in to the inheritance and erode this sum over time.

Can anyone confirm if the inheritance will count against the benefits they would recieve? Or are inheritances perhaps ring-fenced (or similar) if they are to be used towards something like a property purchase?

Finally, I wonder if this would still be the case if the inheritance was placed in some sort of trust that could only be accessed for a major life expense and thereby avoid being used for normal living costs?

Any thoughts/opinions gratefully received!

McKneff

Yes  it will affect their benefits. 
No there us no way it can be put into trust to enable them to keep  receiving benefits. 

TELLIT01

inheritance is not ring fenced.  The figure stated will cause Income Support to stop immediately, as will any other income related benefits.  There may be a way for a trust to be set up by the relative who will be leaving the bequest, but that will require legal advice not guesswork from people on this board.  The recipient certainly cannot set up a trust after receipt without it being classed as Deprivation of Capital - which would mean that the recipient would be considered to still have the money.

Alice_Holt

Income Support, Housing Benefit and Council Tax reduction are means tested benefits. Savings / capital of over £16k will end these claims.
https://www.entitledto.co.uk/help/savings

Child Tax Credits does not have a savings limit, but is reduced by any interest received above £300 p.a.
https://www.which.co.uk/money/tax/tax-credits-and-benefits/tax-credits/how-to-calculate-tax-credits-a17uj7g88zw6

It would be very difficult to get a mortgage if the household had no earned income, so a plan to use the £75k inheritance as a deposit doesn't seem feasible to me.   
Better to use it to increase employment opportunities /  human capital -  learn a trade / get a vocational qualification etc. Could enable the family to live a life free from the DWP, and eventually purchase their own home.