Universal Credit and owning half a property, need advice

Chablar

Hey everyone.
I need a bit of advice. My wife and I claim universal credit, she is on the full rate of both elements of PIP and my son is on DLA. I am registered as both of their carers and get carers allowance. Our entire income is from benefits as I am unable to work due to caring responsibilities. 

My wife's mother recently passed away. She has left my wife her half of the ownership of her caravan that she lived in with my father in law. He owns the other half. The caravan is on a residential site amd you need to be 50 to live there, and it's too small for my my wife, myself and my two kids to move into. 

I can't seem to find any information about this sort of situation online as to what happens. He is not yet at pension age. When I declare it do we just lose our benefits because my wife has an investment over the allowed threshold? Its not a suitable size for us to live there and even if it was we aren't allowed to live there because of the age requirement. Would he be forced to sell up so we can access my wife's investment in the property?

Any advice anyone can give would be great.

Many thanks 

Grumpy_chap

Sorry for your loss.

Does the caravan actually have any value?
I don't mean that in a nasty or derogatory way, but a caravan on a site with a restricted user base, possibly restrictions on open market sale and a sitting tenant may have quite a limited value at the current time.
Did the will make any reference as to the FiL's right to remain in the caravan?  

Alice_Holt

Are there any specialist agents / companies who could give you a valuation of your half of the caravan (with the other half owner in residence).

Or what would the site owner pay for your half?
And would they put that in writing (even if a nil valuation), so that you could supply this info / valuation to UC? 

Like Grumpy_chap, I suspect the valuation would be low.



Once FIL reaches SPA the 'premises' can be disregarded in full.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1174379/admh2.pdf

H2048 / 9

Chablar

Grumpy_chap said:

Sorry for your loss.

Does the caravan actually have any value?
I don't mean that in a nasty or derogatory way, but a caravan on a site with a restricted user base, possibly restrictions on open market sale and a sitting tenant may have quite a limited value at the current time.
Did the will make any reference as to the FiL's right to remain in the caravan?  

I remember my mother in law mentioning about them owning the caravan (for which they had to pay a fair amount) but they don't own the land. My father in law pays ground rate every month for the land

It doesn't mention anything about restrictions on my father in law living there no. 

This is the bulk of it:

"I give my half share of the property known as *address* or any other property I may own at the date of my death to *my wife*

My trustee shall hold the residue of my estate whatsoever and wheresoever situate upon trust to sell call in and convert the same into money with full power to postpone such sale calling in and conversion for so long as she shall in her absolute discretion think fit without being liable for loss. 

My trustee shall hold the net proceeds of such sale calling in and conversion and my ready money upon the following trusts:-

*Trust to pay my just debts and funeral expenses

*Trust subject thereto for such of my grandchildren (names 4 grandchildren) as shall be living at the date of my death attain the age of 18 years in equal shares absolutely

Any money requiring investment under the terms of this will may be invested by my trustee as if she were the sole beneficial owner of such money.

My trustee may advance from my estate such sum or sums as she may in her absolute discretion think being appropriate to or for the benefit of any infant beneficiary hereunder and I express the wish but with without imposing any legal trust or obligation upon my trustee that she will exercise the power hereby given to her to further the education and general benefit of any infant"

Sorry for the huge info dump. That about sums it up. A lof of that solicitor lingo I find confusing, especially the second paragraph. I'm not sure if that means we can sell up whenever, it's a bit confusing. 

Again, any help would be amazing

Chablar

I'll take a look at the link Alice, thanks. My mother and father in law paid £115,000 for the caravan if that's of any use.

(Sorry I had to edit your link out because I'm a newbie)

Grumpy_chap

Is the OP (or the OP's wife) the Executor of the MiL's WILL?
Or, is the OP assisting the FiL who is Executor?

Let's look first at the short sentence relating to the MiL's share of the caravan.

Chablar said:

"I give my half share of the property known as *address* or any other property I may own at the date of my death to *my wife*

If that is everything, then it is simple and clear (!?) that half the caravan passes to the OP's wife.
Except, not so "simple and clear" in practice because of the questions it raises:

• Where does FiL live?
• Can the half a caravan be sold?
• Who meets the costs such as the ground rent?  Maintenance?
• If the FiL remains in the caravan, does he pay rent for the half that is the OP's wife's?

It is just unusual, especially if this was a Will written by a Solicitor, that it does not make reference to how the FiL is to be accommodated.

The first thing I would look for is a "survivorship clause".  You are looking for a clause that says something along the lines of "If my husband *FiL* lives 30 days or more after my death, then I *MiL* leave everything to *FiL*".  It will be written in more legal language but that would then render the majority (if not all) of the residual Will irrelevant.

EDIT TO ADD:  I have not ignored the parts about the residual estate, but those would seem (from what has been posted) as relatively straightforward.  The first thing is to establish any provision within MiL's Will for FiL.

Chablar

Hi again Chap. My wife is indeed named "sole executrix and trustee of this will" in both my MiL and FiL's wills. 

That is clause 1 in my MiLs will, clause 1 is revoking her previous will. The rest of the will is just everything I posted above. My FiL isn't even mentioned by name other than signing as a witness. 

My FiL's will says his half goes to my Mil, unless she has died or survived FiL and has not "attained a vested interest" in which case it goes to my wife. That's the only mention of my Mil in my FiL's will.

My MiL and FiL had quite an on/off relationship, when they moved into the caravan together it was unsure whether or not they would have a clean break or move together - they decided on the latter. Which in retrospect was the better option given what has happened. I think he was left out of her will because she wanted it all to go to her children / grandchildren. 

My FiL lives in the caravan now. I'm just not sure what to expect when I declare this. We can't live there because of the age threshold and its a 2 bedroom caravan. My FiL is not at retirement age, so are the DWP in the habit of counting it at capital until you sell the property, which would leave my FiL looking for somewhere to live. 

As far as I've read if we lived in the property the capital would be disregarded, but i can't find any information for a property we are not able to live in. It's all very confusing. I think I'm just scared to declare it (which of course I will) going in blind and then having it all blow up in my face. Like I said before we rely entirely on benefits for income. 

Thanks again 

Grumpy_chap

OK, so the Will simply says, in lay terms, that the half ownership of the caravan passes to your wife on the death of MiL and no reference as to how FiL is to be accommodated or provided for.

As you have stated above, the caravan is not suitable for you (and family) to move in.  

There is also the case that FiL needs to live somewhere.  It may be too soon for you to have had this conversation, but does FiL wish to continue living in the caravan?  (If not confirmed, is that your working assumption?)

If your wife owns half the caravan, that would make her half "landlord"  to FiL.  
Presumably your wife is then liable for half the ground rent plus half the maintenance costs but in return, FiL would have to pay rent for the use of the second half of the caravan.
What would the open market rent be for the caravan / static home / lodge?
What are the ground rent costs?  I'd expect something in the region of £2k - £5k per year
What are the maintenance costs?
Would the costs offset the potential rental income thus making it reasonable to allow the FiL to continue living rent-free?

If FiL remains in the caravan, what is the caravan worth?
FiL and MiL paid £115k how many years ago?
These caravan / park homes / static homes / lodges tend to be depreciating assets.
Sometimes (quite commonly) the site operator has a clause that restricts the sale as back to the site owner only.  Does that apply here?  It can restrict the sale value.
The restriction for "over 50's only" will likely also reduce the open market value.
The sale value will then be reduced by the fact it is only half the caravan and the "other half" has a sitting tenant.

I am not saying this about the value of the caravan to diminish the worth but, in an odd way, things are simpler for the OP if the value can be subject to disregard, or treated as having a low nominal value that does not negate the benefits entitlement.

The alternative to the FiL wishing to continue living in the caravan is that the FiL wishes to move elsewhere.  This makes the sale of the caravan easier and the value likely higher.  There would be a disregard for a reasonable sale period (usually 6 months).  After the sale, the proportion of the sale value would impact UC calculation as any other cash balance would.

I am not an expert on "disregard" and there are other contributors who will be able to advise in more detail, but I think that justifying an indefinite (until FiL passes) disregard is the route to pursue.  (An indefinite disregard might be simply impossible, I am not knowledgeable enough.)  Take advise from others how this can best be structured and presented to satisfy a Decision Maker.

The immediate steps would seem to be:

1. Does FiL wish to remain resident in the caravan?
2. What is the current valuation of the caravan given the various constraints?  Formal valuation required if possible.

itsthelittlethings

I seem to remember that property which is lived in by a family member is not counted as savings for the purpose of UC - check this though. Otherwise she may be in trouble (or FIL may be in trouble) as they would count the property she owned as savings and either she would have to sell it to release the money (I think you are given 1 year to sell) or she would not be entitled to UC.

itsthelittlethings

Entitled to say that other property lived in by a relative who is long term incapacitated or over state pension qualifying age is disregarded. Check their website for details.

Chablar

Hi again Chap.

Yes my FiL does want to continue living there, he's been clear about that.

If your wife owns half the caravan, that would make her half "landlord"  to FiL.  
Presumably your wife is then liable for half the ground rent plus half the maintenance costs but in return, FiL would have to pay rent for the use of the second half of the caravan.
What would the open market rent be for the caravan / static home / lodge?
What are the ground rent costs?  I'd expect something in the region of £2k - £5k per year
What are the maintenance costs?
Would the costs offset the potential rental income thus making it reasonable to allow the FiL to continue living rent-free?

If FiL remains in the caravan, what is the caravan worth?
FiL and MiL paid £115k how many years ago?

I hadn't thought about any of that, I didn't know that how any of it worked. He pays around £135 for the ground rent each month - so roughly £1600 a year. I'm not sure about rent, maintenance costs etc. They moved in around 4 or 5 years ago. 

Don't worry about about the diminished worth part, I understand what you mean. It would definitely be a lot simpler if the capital was negated. That's what I was hoping the outcome would be, I'm just not sure what the DWP's course of action would be. With us being unable to live there surely the only way of accessing that capital would be to sell that half independently. 

I'll have a look into a formal valuation. Do you mean a formal valuation of the caravan as a whole, or a formal valuation of one half ownership?

Thanks again for the time