Financial advice: lump sum inheritance whilst on Universal Credit

Yamor

Whilst I agree that paying down a mortgage will always be fine, it does not necessarily follow that buying a greater share of the property will also be fine. DWP could still argue that that is deprivation. Same could go for a pension contribution out of capital.

Regarding the various capital disregards, there's nothing wrong with checking the ADM, but I would always advise checking the source legislation (in this case Schedule 10 of the UC Regs) for the comprehensive list.

https://www.legislation.gov.uk/uksi/2013/376/schedule/10

HillStreetBlues

Newcad said:

Agreed that is what the 'standard' oft quoted situation is, which is why I am not sure.
There are often less quoted, non-standard, provisions as well.

I would be surprised if there isn't something burried in the ADM about such shared ownership schemes, (but I'm not up to trawling the labyrinth that is the ADM at the moment).

But I don't see any harm in asking on the journal, as said if they refuse then the situation hasn't changed.

I don't know the process about shared ownership and time it would take and any time limits.
But could the OP start the ball rolling now if they are sure of inheritance so paperwork is mostly complete and then it's just waiting for money to clear?

Spoonie_Turtle

Newcad said:

Agreed that is what the 'standard' oft quoted situation is, which is why I am not sure.
There are often less quoted, non-standard, provisions as well.

I would be surprised if there isn't something burried in the ADM about such shared ownership schemes, (but I'm not up to trawling the labyrinth that is the ADM at the moment).

But I don't see any harm in asking on the journal, as said if they refuse then the situation hasn't changed.

They won't make a decision on anything that hasn't actually happened yet, so no point asking. 

You say no harm, but if a worker who doesn't understand the legislation and/or doesn't understand the query decides to give (wrong) advice, that would result in distress at the very least if the claim is closed and OP is expecting it not to be.

Muttleythefrog

Spoonie_Turtle said:

Newcad said:

Agreed that is what the 'standard' oft quoted situation is, which is why I am not sure.
There are often less quoted, non-standard, provisions as well.

I would be surprised if there isn't something burried in the ADM about such shared ownership schemes, (but I'm not up to trawling the labyrinth that is the ADM at the moment).

But I don't see any harm in asking on the journal, as said if they refuse then the situation hasn't changed.

They won't make a decision on anything that hasn't actually happened yet, so no point asking. 

You say no harm, but if a worker who doesn't understand the legislation and/or doesn't understand the query decides to give (wrong) advice, that would result in distress at the very least if the claim is closed and OP is expecting it not to be.

Could be worth a punt (unless disclosing the intentions/info carried risks for any different plans).... I got a message on journal saying a Decision Maker would not take a decision on extending the month for my wife's trip abroad until and unless she was abroad beyond the permitted month... and within a couple of hours a DM stepped in and took a decision to grant 2 months before she got on the plane. Mind you this was rather a simpler decision to take.

ElwoodBlues

Yamor said:

Whilst I agree that paying down a mortgage will always be fine, it does not necessarily follow that buying a greater share of the property will also be fine. DWP could still argue that that is deprivation. Same could go for a pension contribution out of capital.

Regarding the various capital disregards, there's nothing wrong with checking the ADM, but I would always advise checking the source legislation (in this case Schedule 10 of the UC Regs) for the comprehensive list.

https://www.legislation.gov.uk/uksi/2013/376/schedule/10

It's also arguable that there has been no deprivation of capital because the claimant has not disposed of it, they've just converted their capital from a non disregarded type to a type that is disregarded (equity in their primary home). I think same could be argued for pension contribution - claimant still has the capital, but held as a type that is disregarded.

OP really needs to run some numbers and get professional advice on what's going to be best for them - pension vs home equity. Factors like, age, pension pot, projected income etc are all relevant. It might make sense to rely on pension  25% lump sum to pay off mortgage, buy final chunk of equity in shared ownership.

All shared ownership/help to buy schemes are different, the terms and conditions vary by developer/estate. OP needs to check exactly what theirs is. I would say that anyone considering shared ownership scheme should carefully check the terms and be comfortable that it'll work for them. A lot of them aren't great tbh - bear in mind that the resident is often responsible for 100% of the repairs and maintenance despite only owning a share of the property. But the important thing is the scheme's 'staircasing' rules - i.e. how the resident is allowed to increase their share of ownership. Some schemes have restrictions like never allowing them to become 100% owner, restricting the number of times/steps the resident can staircase in (particularly pertinent for the OP I'm guessing).

As for a pension lump sum contribution - don't forget the carry forward rules allow you to use up any allowance remaining from the last three years as well. So you might easily have enough allowance left to accommodate a 25k pension contribution.
 

HillStreetBlues

ElwoodBlues said:

It's also arguable that there has been no deprivation of capital because the claimant has not disposed of it, they've just converted their capital from a non disregarded type to a type that is disregarded (equity in their primary home). I think same could be argued for pension contribution - claimant still has the capital, but held as a type that is disregarded.
 

It doesn't matter, it's still down to "significant operative purpose". CIS/809/1991

But it's up to them to show that, rather than OP needed to prove it.

I believe you can get a mortgage with shared ownership, so if OP could get a £25,000 mortgage use that to buy a bigger percentage  then once inheritance came pay off mortgage.

kaMelo

ElwoodBlues said:

As for a pension lump sum contribution - don't forget the carry forward rules allow you to use up any allowance remaining from the last three years as well. So you might easily have enough allowance left to accommodate a 25k pension contribution.
 

Only if your earnings are great enough to allow it.
The carry forward rule does not negate the rule that you cannot contribute more than you've earned into a pension each financial year.  (Apart from the £2880 allowed for non earners of course)

Yamor

ElwoodBlues said:

Yamor said:

Whilst I agree that paying down a mortgage will always be fine, it does not necessarily follow that buying a greater share of the property will also be fine. DWP could still argue that that is deprivation. Same could go for a pension contribution out of capital.

Regarding the various capital disregards, there's nothing wrong with checking the ADM, but I would always advise checking the source legislation (in this case Schedule 10 of the UC Regs) for the comprehensive list.

https://www.legislation.gov.uk/uksi/2013/376/schedule/10

It's also arguable that there has been no deprivation of capital because the claimant has not disposed of it, they've just converted their capital from a non disregarded type to a type that is disregarded (equity in their primary home). I think same could be argued for pension contribution - claimant still has the capital, but held as a type that is disregarded.
 

As HillStreetBlues says, case law is quite clear that converting capital from a type taken into account for benefits to a type not taken into account (e.g., property or a pension pot) can still be deprivation.

I also think it would be difficult to argue that the getout for buying "goods or services" reasonable in their case helps them, as both property and a pension pot would not seem to be included in " goods or services".

Muttleythefrog

It's a shame there doesn't seem a  wealth of decisions of similar nature to this in recent case law. As above they could consider deprivation to exist even if changed into form not considered for capital purposes. 

Thoughts in my mind (as I'm also set to inherit monies and lose entitlement to UC although I've no intent to reclaim)

Intent and belief could be factors - if you could live without the UC I'd be almost tempted to state plans and say you realise that'll end your UC payments.... be difficult for them to later argue motive was to gain benefits when reporting change (although the reporting of that change could be tricky since increasing equity in property after acquiring the funds may go beyond assessment period in real world timeline).

Also argument to some degree that your actions actually reduce benefit entitlement (increasing property ownership share which seems a reasonable and sensible measure whether you receive benefits or not as reduces need for help with rent of remaining share or rent you'd have to pay if getting no help).

One wonders how they would consider a cessation of claim and claim say in a years' time having disposed of the funds as planned.

The mind wanders.... would be great to have access to an experienced DM giving advice on these boards for such scenarios if they are seeing them regularly coming across their desk.

HillStreetBlues

@Muttleythefrog
The trouble with DoC it's ruled after the fact when it can be too late.
So claimant needs to get as much advice as possible.

I thought at first that if OP bought more then UC would decrease , I did forget that in buying more it increases UC as otherwise claim would end.

It does seem perverse that if OP  could borrow the £25k before entitled to inheritance, the OP could use that money to buy more, then pay it back once entitled to inheritance. But when borrowed it would have to be paid directly to the HA