State Pension & Inheritance

calcotti

Thanks pmlindyloo - I had never spotted the rules for debt for PC are different to legacy working age benefits. Much more sensible (and I'm glad that it is now clear for UC too). Apologies to OP for getting that bit wrong.

calcotti

Deleted_User said:

..as a property left to an individual as inheritance but (you reminded me) that in effect it was left to this gentleman 15 years ago along with his two siblings and has already been declared at that time in 2005 as a shared ownership to DWP and as ‘he being non resident’ there...
 he intends to purchase a property with it and replace his 20 year old car as it is falling apart and although he does not drive he is driven due to disability.

In the circumstances you describe he already has capital equivalent to his third share but it is presumably being disregarded because he cannot force a sale without their agreement or because they are also over pension age.

The disregard for proceeds of a property sale applies to a property previously lived in as a home. In the circumstances you describe that disregard doesn't appear to apply and once the property is converted to cash it will fall to be counted.

Can't see buying a car being a problem in these circumstances - indeed, depending on the nature of his disabilities, a more expensive car may be perfectly reasonable if it means that it is easier to get in and out or needs to be adapted in some way.

[Deleted User]

calcotti said:

Deleted_User said:

..as a property left to an individual as inheritance but (you reminded me) that in effect it was left to this gentleman 15 years ago along with his two siblings and has already been declared at that time in 2005 as a shared ownership to DWP and as ‘he being non resident’ there...
 he intends to purchase a property with it and replace his 20 year old car as it is falling apart and although he does not drive he is driven due to disability.

In the circumstances you describe he already has capital equivalent to his third share but it is presumably being disregarded because he cannot force a sale without their agreement or because they are also over pension age.

The disregard for proceeds of a property sale applies to a property previously lived in as a home. In the circumstances you describe that disregard doesn't appear to apply and once the property is converted to cash it will fall to be counted.

Can't see buying a car being a problem in these circumstances - indeed, depending on the nature of his disabilities, a more expensive car may be perfectly reasonable if it means that it is easier to get in and out or needs to be adapted in some way.

In this regard you are correct Calcotti in that his only remaining Parent passed away in 2005 and the property passed to the three children of which he is one. His two siblings lived/live abroad and one of those in the house itself. He has always lived in the UK and had no desire to live abroad and as you rightly stated he was unable to force (or had no desire to) a sale in the past 15 years. 

Now age and health is affecting all three children especially the only resident his brother and so time is having the last word. 

At that time in 2005 he declared what ever he needed to to the DWP in relation to his Benefits and his one third share of the property was disregarded for the purpose of his Benefits. Now in 2021/22 if the property is sold, then he will most likely have to pay Capital Gains Tax in both Europe and the UK as since the UK left the EU the ‘special tax’ arrangement has deteriorated. Luckily the property hasn’t increased much in value in 15 years as it has fallen in to disrepair but he will have to pay twice I believe both in the EU and UK.  I guess he could start looking over here now and by the time the foreign government process their Capital Gains Tax requests and he finally receives his share in the UK, he may be able to reduce the time he looses his PCGC and CT benefits and won’t require HB. Sadly if the sale happens it will become a burden and disruption in a way as he would rather not receive the additional Capital and is very much afraid of change and the disruption it will cause. 

Sometimes, no matter how beneficial it may seem, receiving money can have its negatives. And I say this with great respect and consideration to those who are working hard and contributing to a system that positively helps many many people. I guess he could always gift his share to his family abroad or put it in trust for them there? Is that viable or reasonable? If he never receives his share or gives it away before the sale then I guess he could solve his problem in this way. Moving home is very stressful at any age but when disabled and just wanting peace and quiet it’s understandable that what others may see as a welcome extra few pounds he sees as a burden and potential threat to that peace and quiet. 

calcotti

Deleted_User said: Sometimes, no matter how beneficial it may seem, receiving money can have its negatives. 

That is undoubtedly true. I have seen cases where people are managing on benefits and then inherit money ending all of their means tested benefits for the time being in the full knowledge that in the not too distant future they will have to reapply and satrt again.

[Deleted User]

Thank you to everyone who replied and offered advice. The information was very helpful and has cleared a path for this gentleman to understanding he will keep his State Pension and PIP but loose his PCGC, HB and CT. This very unsettling  for him but I have explained to him it’s better to clearly know what is going on, rather than get surprises. I have also explained why he would loose them and  also that they can be reclaimed at a later date if he were to buy a property or once his Capital drops below £10,000 after reasonable spending. (Is the threshold £10k for PCGC and £6k for HB?)

I’ve also advised him to open a separate bank account with his same bank so that any Capital Gain he receives and then Taxes and ‘Reasonable’ ‘Essential’ spending from is clearly defined and shown. In the future, if he does need to reapply for his Benefits he can clearly and easily show everything is in order in one place and a proper track record of spending is shown. He will need to make a weekly payment to his regular bank account to replace his lost Pension Credit and also for his Rent (lost Housing Benefit. These two payments representing his financial ‘Benefit Loses’. 

This will then show this spending is only replacing what he lost in benefits. I’ve also advised that a replacement car would be reasonable as his is 15 years old and needing replacement, as would an orthopaedic bed and arm chair to help his daily mobility could be paid from this account. I‘ve also explained he can’t gift money away or recklessly spend it. 

Is there anything which could be seen as ‘reasonable’ spending from this account that would not be seen as Capital Deprivation? Odd things that everyday people may not consider. Is having one holiday a year reasonable if it is at the same cost as previous holidays he has been? (ie no change in circumstances). Would Household repairs  be seen as reasonable if not luxury but for his mobility? ie a slope installed instead of step? Replacing a bath for a wheelchair/walk in shower? 

I appreciate that eventually it comes down to the individual circumstances and the individual assessor on the day making an assessment. I’m just trying to gage what would be reasonable and possibly consider things that I may not have thought of or things others have in their experience.

Thank you

calcotti

Deleted_User said: I have also explained why he would loose them and  also that they can be reclaimed at a later date if he were to buy a property or once his Capital drops below £10,000 after reasonable spending. (Is the threshold £10k for PCGC and £6k for HB?) 

You have misunderstood the advice given. There is no threshold for PCGC. Any savings above £10,000 affect the amount of PCGC but they do not prevent a claim. Whether or not their is any entitlement will depend on circumstances. For HB if there are savings over £16,000 a claim cannot be accepted unless PCGC is in payment in which case maximum HB is payable regardless of any savings.

calcotti said: For Pension Credit Guarantee there is a deduction of £1/week for every £500, or part thereof, of capital above £10,000. There is no upper savings limit but obviously the deductions may reduce the award to nil.

If any Pension Credit Guarantee remains payable entitlement to maximum Housing Benefit & Council Tax Benefit is retained (and capital is ignored).

If Pension Credit Guarantee is no longer payable Housing Benefit & Council Tax Benefit will have to be calculated with a reduction for capital in excess of £10,000. There will be no Housing Benefit or Council Tax Support payable if capital exceeds £16,000.

calcotti

Deleted_User said: Is there anything which could be seen as ‘reasonable’ spending from this account that would not be seen as Capital Deprivation? Odd things that everyday people may not consider. Is having one holiday a year reasonable if it is at the same cost as previous holidays he has been? (ie no change in circumstances). Would Household repairs  be seen as reasonable if not luxury but for his mobility? ie a slope installed instead of step? Replacing a bath for a wheelchair/walk in shower? 

All of the above is reasonable. The intention of the rules is not to prevent people making use of their capital, only to stop them exploiting the benefits system. Having an additional holiday would be reasonable too - but probably not a round the world cruise (even if one wanted such a thing at the present time).

[Deleted User]

Thanks Calcotti. I did understand the original initial advice given but so as not to confuse or over complicate I have explained that when close to £71,000 Savings he can reapply based on the advice that for each £500 above £10,000, £1 will be deducted (at the present time).

In his case, he would loose all his PCGC as his savings would be well above this sum. 

Once down to £71,000 he could start applying and doing paperwork allowing for processing times and an application for PCGC would make perfect sense from a full allowance of Housing Benefit perspective even if the PCGC was very low or minimal. 

(Please advise if I have this wrong, unless you meant that even with several hundred thousand in Savings PCGC could still be awarded based on exceptional circumstances?)

It’s good to know the aforementioned items would be considered reasonable expenditure and also a holiday could be paid for from this Capital. I doubt he would be interested in anything lavish but a trip to Cornwall or Cumbria or a visit to see his siblings abroad in Europe would bring some peace of mind and comfort. 

Thank you again.

calcotti

Deleted_User said:  (Please advise if I have this wrong, unless you meant that even with several hundred thousand in Savings PCGC could still be awarded based on exceptional circumstances?)

My comment was simply in response to your comment which read as if you though PCGC could not be claimed with savings over £10,000.

SusieT

Deleted_User said:

Now in 2021/22 if the property is sold, then he will most likely have to pay Capital Gains Tax in both Europe and the UK as since the UK left the EU the ‘special tax’ arrangement has deteriorated. Luckily the property hasn’t increased much in value in 15 years as it has fallen in to disrepair but he will have to pay twice I believe both in the EU and UK.  

It may be worth popping a post in the Tax area of the forum to clarify this. 
I know that there are double tax agreements with various countries (both in and out of the EU), and these are with the individual countries rather than the EU itself. Therefore the DTA should still be in place with no changes to them, and it is unlikely that he will have to pay CGT twice, but you would need to ask or look online for the DTA for that particular country as each one will be different. .