Using an inheritance to buy a council flat via "right to buy" for someone on benefits

eddddy

Inigo_Montoya said:

I was just wondering if anybody knew if using this Trust money to buy her flat has any implications for her benefits - if the purchased flat was put into the Trust then I assume not  but if the flat was put into her name then there possibilly could be 

I'm absolutely no expert on this - but if the money is in a trust (however it gets there), it would need to be the trust that buys the property.

But to be eligible for the rtb discount, I doubt that the property can be bought by a trust, it can only be bought by the tenant, who then has to own it for 5 years. (So it can't be transferred to the trust for 5 years, unless some of the discount is repaid.)

theartfullodger

Inigo_Montoya said:

..

The Will specifically states the money goes into Trust from the "get go" so my understanding is that it will not affect her benefits 

Probably, but it will depend on exact wording and the decisions of the benefits agency, not what you or I think....

Inigo_Montoya

My thinking now is that her Trust fund could give her an interest free loan to buy the flat - that way the Benefits agency cannot claim deprivation of assets as a loan is not an asset

Then as far as I can see it would just be a case of whether the flat being worth more than the loan is counted as capital to be taken into account with respect to benefits 

I believe my RAC legal expenses insurance provides free legal advice so I will give them a ring 

newdriver101

Inigo_Montoya said:

My thinking now is that her Trust fund could give her an interest free loan to buy the flat - that way the Benefits agency cannot claim deprivation of assets as a loan is not an asset

Then as far as I can see it would just be a case of whether the flat being worth more than the loan is counted as capital to be taken into account with respect to benefits 

I believe my RAC legal expenses insurance provides free legal advice so I will give them a ring 

Technically, a loan is an asset...

eddddy

newdriver101 said:

Technically, a loan is an asset...

The loan is only an asset to the lender - it's a liability to the borrower.

So the loan would be an asset for the trust. But it's a liability for the OP's sister.


(Although, I'm not sure whether the strategy would work for other reasons.)

sammyjammy

Honestly sounds like a recipe for disaster, if the property were purchased would it leave funds in the trust for her other future needs?

The only true way to know is to set out the situation and proposal to DWP when the trust/will is completed. 

Jude57

user1977 said:

Inigo_Montoya said:

davilown said:

Giving her a secure home for the rest of her life would be a good idea.  Has the inheritance already been put into a trust though? Is it written in the will to be in Trust or is it cash that she has inherited that you want to put in trust? If the latter, it may significantly affect any benefits she may be entitled to. 
Best to check with a specialist to give you sound legal advice 

As far as ongoing charges & possible liabilities for flat / block repairs goes that would be disclosed during the Right to Buy process 

Only insofar as any works are currently contemplated though - she'd need to take the risk of any future costs.

Warning: Long post ahead!

Just to give some insight into potential future works, I live in a flat in a block. I rent from a Housing Association which was formerly a Council landlord.

In the years between 2009 and now, the following have been carried out to my flat to meet the standard required by law, so weren't by my choice, and all flats whether owned or rented had to have the works done. I know my HA got court orders to force at least two owners to permit entry for the works or safety assessments to be done:

New windows (it's a 14 storey block so major works)
New central heating boiler and extra radiators
Replacement of gas fire with electric including new fire surround and mantelpiece
Partial rewire including new consumer unit
New bathroom including tiling, flooring and decorating
New kitchen including tiling, flooring and decorating
New hard wired smoke alarm
New hard wired carbon monoxide monitor
New fire resistant front door to flat
New hard wired security alarm
New video entry panel/communication panel
Testing for asbestos
Installation of cavity wall insulation

Works to the communal areas include:

New aerial on roof which feeds in to all flats
New door entry system
Refurbishment of foyer including new flooring
Rewire of whole block
Upgrade of smoke/fire alarm system
2 new lifts
Refurbishment of all landings including new fire resistant doors to stairwells, dropped ceilings, new lighting and flooring
Testing and removal of asbestos
Installation of cavity wall insulation
New roof to entrance to block foyer
Regular painting of interior and exterior

Then there's the usual recurring things like:

Regular maintenance of landscaping
Cleaning communal areas
Window cleaning
Gas safety checks
Electrical safety checks

In addition, I've had a level access shower installed because of mobility issues.

If I had bought my flat, those works would have still had to be done and I would have had to pay a proportion of the cost, likely many tens of thousands of pounds. As it is, I pay my rent but everything above and probably more I've forgotten, has been at no additional cost to me.

Repairs are not something I need to worry about and as long as I remain a good tenant, I can't be evicted. If I ever need supported accommodation, my HA has that, too, although they will fund further adaptations to help me stay in my present home.

TL:DR I wouldn't want to lose all the positives of my secure tenancy for the real risks of an owner of a flat in a block. Of course, if I win the Lottery it would be different but for now, I realise how lucky I am to have my secure tenancy.

Marvel1

I'm.concerned the OP is only worried about the affect on benefits but not the issues of repairs etc!

sammyjammy

Marvel1 said:

I'm.concerned the OP is only worried about the affect on benefits but not the issues of repairs etc!

To be fair OP has not said how much of the inheritance would be left ot cover such things after the purchase

getmore4less

This caught my eye,

My sister is currently living on benefits - she was on Disability Living Allowance but recently has been deemed fit for work so as I currently understand it is now on Universal Basic Income & I believe also gets her rent & council tax paid 

It is not uncommon for trusts set up in wills  to be the special ones for vulnerable people but if the circumstances have changed it would need checking if that is still appropriate. 

DLA is one of the qualifying benefits.

overview

https://www.gov.uk/trusts-taxes/trusts-for-vulnerable-people