Inheritance whilst on benefits - what is 'reasonable' spending?

System

This discussion was created from comments split from: 17K inheritance while on benefits.

Tuesday

A friend of mine has just inherited over £30k.  She's physically disabled but manages to work part time but has her income topped up by benefits. Does anyone know what classes as 'reasonable'. Can she take her child on holiday to Europe? Buy herself a dishwasher? Have a takeaway every Saturday? She is terrified of being penalised for being extravagant.

Robbie64

Hi Tuesday. It's best to start a new thread as people often read the first post in a thread and reply to that. Given the amount involved and as we would need to know what benefits are being paid it might lead to a few replies so best to start a new thread.

MSE_ForumTeam5

We've split this into its own thread

HillStreetBlues

With "just"  is that told about it, or has received the money?

Kim_13

Tuesday said:

A friend of mine has just inherited over £30k.  She's physically disabled but manages to work part time but has her income topped up by benefits. Does anyone know what classes as 'reasonable'. Can she take her child on holiday to Europe? Buy herself a dishwasher? Have a takeaway every Saturday? She is terrified of being penalised for being extravagant.

The dishwasher definitely wouldn’t be a problem - keep the receipt as evidence. As she is physically disabled, having a dishwasher would surely help her to do more - whether that be a little more work or needing less help to take care of herself and her child.

sheramber

What benefits does she recieve? Whether they are means tested or not means tested will  affectt eh answers.

If they are not means tested  the spending won't matter.

If any benefits are means tested then her inheritance will probably  result in that benfit being stopped.

Muttleythefrog

As above... let's start with some facts... what benefits is she getting? Then we can determine first if they're affected by the savings she now has. If they're affected then we can look at the spending which in the examples sounds reasonable (although of course a holiday to Europe could be £200 or £20k and I would imagine closer to the first amount). It's entirely possible her anxieties are not warranted as she likely will lose entitlement to means tested benefits (she would need to report this change in savings) for at least the time it takes for her capital to reduce and non means tested her savings and spending would be irrelevant. 

Tuesday

She has spina bifida so receives PIP, I know that won't be affected. She is a single mum with a 6 yr old child. They live in a council house. She works 15 hours a week over 3 days and isn't physically capable of working more hours. She receives housing benefit and Universal Credit to top up her income. Her ex husband doesn't contribute at all. 
As a child, her Dad ran his own business until a serious accident left him in a wheelchair. Her parents sold their house to move into council accommodation suitable for her parents (her mum had spina bifida too so was already disabled). She tells me that her parents used the equity from the house to pay the business debts and that they were left to starve as the benefits office said they shouldn't have done that and refused them benefits for a long time. She remembers being hungry and doesn't want this to happen to her child.
She knows she will lose her housing benefit and UC until her capital is reduced. She is just terrified of being told she has been reckless with spending her capital and being refused benefits.

Tuesday

HillStreetBlues said:

With "just"  is that told about it, or has received the money?
It landed in her bank account this week. She'd known she was to inherit something but had no idea how much or when until she checked her bank account.

It's just arrived in her bank account.

peteuk

So she now has £30K in her bank…

She is over the threshold of £16K for UC, unless she spends £14K reasonably before the end of her assessment period then her UC will stop.

Is her HB part of her UC? If it is separate then the question is is it means tested, if so then again above the £16K in savings/capital then it will stop.

As you know PIP is not means tested and so will not stop.

What is reasonable can vary and will depend on the circumstances.  Gifting the money is not seen as reasonable so if she gives it to her son, it will be counted as she still has it.  Buying a £5K car is ok, £40K car is unreasonable. New kitchen if not replaced since 1970 understandable etc etc.   I am not 100% sure but I believe I saw a link to the DM handbook, which might help work out what she can spend it on and not have it penalise her. 

Question for the wider audience, does the disability effect the saving threshold?