Inheritance of a house that was and will continue to be your home and effect on benefits

First the simple question; If an offspring inherits the family house that they had been living in as their only home and will continue to live in, is that ignored for means tested benefits.

Assuming yes to first question here are the real life complications:- If that person only inherits a share of the house and uses their pension pot and savings to buy-out the co-inheritors would that action be ignored for means tested benefits.

Comments

  • As for the first question, no it would not loose you any means tested benefits.

    The second question is more complicated. Presumably you don’t have much in the way of savings otherwise they would already impact the amount of means tested benefits you get, so I assume most will come from you pension pot, which raises a load of other issues, the primary one will be tax. Cashing in an entire pension pot will lead to a hefty tax liability and reduce your ongoing income.

  • Alice_Holt
    Alice_Holt Posts: 5,857
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    i)   Yes

    ii)   Potentially no, which means tested benefits are involved?
         Also using your pension pot could give rise to an income tax liability, you will need to give more details of your    plan. 
    What are your savings currently?   
    If you use all your savings how will you fund house maintenance, etc ?
    Are you getting legal advice?
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
  • Just on a benefit point I see no issue with either.
    If you buy out your co-inheritors you would be moving capital to a home you live in. So you still would have the capital, but it would be ignored.
    Let's Be Careful Out There
  • Alice_Holt
    Alice_Holt Posts: 5,857
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    Just on a benefit point I see no issue with either.
    If you buy out your co-inheritors you would be moving capital to a home you live in. So you still would have the capital, but it would be ignored.
          However in the course of withdrawing money from his pension pot (capital ignored for means tested benefits) the OP may have at some point more than £16k in his bank account (capital not disregarded). If he is on UC this could cross assessment periods.
        If he needs to withdraw more than 25% from his pension pot, it will all be taxed at an emergency rate, and the OP will need to reclaim any tax due back to him - this timing issue may increase the likelihood of the money sitting in his bank account before finally settling with his co-beneficiaries.
       Once settled he should be able to reclaim the appropriate means tested benefits.          
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
  • TELLIT01
    TELLIT01 Posts: 16,256
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    The big question is, how much do they currently have in savings.  It just seems it would need to be a big savings pot and low current savings for any income related benefit not already to be affected.  That's not an impossible situation.
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