Inheritance Q and A

Muttleythefrog

[Deleted User] said:

Muttleythefrog said:

[Deleted User] said:

poppy12345 said:

Morglin said:

If you don’t wish to accept an inheritance then a Deed of Variation might work best:

https://www.irwinmitchell.com/personal/probate/probate-guide/changing-will-after-death

That's not going to help for means tested benefits purposes and will likely been seen as deprivation of capital. 

I have had a chat with the Citizens Advice and they said that as long as no liquid assets are transferred into my account and i choose to inherit the house and my brother chooses to keep the savings, that there is no issue with DoA.  This is because the will did not designate any particular asset to any one beneficiary.  Since the house value outweighs the savings value, there is no conflict regarding "avoidance of inheritance".     Also it was noted that if i choose to sell the house at a later date I am allowed to keep the cash from the sale in my bank for 6 months before declaring to DWP that i have excess savings. This is allowed for the purpose of buying a new residence within those 6 months.  

Just to clarify on the last point.... emphasis may be wrong. My understanding is you will need to declare sale proceeds on receipt of them and ask for it to be disregarded for (up to) 6 months on the grounds that the intention is to buy a new property to live in with those sale proceeds. They may ask for proof both of the funds or intentions to buy although recently when I went through the process they took my word for everything. They can extend the 6 months further on request if for example the purchase is yet to complete. (I assume you will have no other property)

No, i dont have any other property.  Im renting until the probate goes through, but i visit the house to do repairs and check on it, stay a long weekend, etc.  I would assume if the new property was of lesser value (caravan, houseboat) you would need to pay back the 6 months, since you will have excess savings going forwards.  Could be tricky trying to find a place that consumes all of the assets from selling your primary home and spending the same amount on your future home.  Could go under or over. And if under you're buggered by having too much excess in the bank.  If over, then youre buggered trying to find capital for a mortgage.  3 bears syndrome. 

You've identified that tricky factor which is a real one in a property search when you have funds you want to spent almost entirely (minus the costs of doing the legal transaction and moving/ getting your new sofa) such that you still have minimum savings. Been there but achieved it... and for wider society often a property search is about getting the best property one can afford.. pushing those limits. Work backwards perhaps.. estimate of the legal fees/costs of solicitors inc stamp duty, estimate of moving costs, estimate of survey, and then from total funds held following sale proceeds receipt figure out a range of purchase price of property that leaves you the day around moving money but not more than £6k. I aimed at being sat in the removal van with £3k in savings and that was achieved but in any property purchase process luck is involved. 

More control over the process perhaps exists if you were to move into the inherited property and then try to sell and buy at same time as most resellers do but that would mean one more move for you.

ElwoodBlues

As the items in the estate (house and cash)  haven't been bequeathed explicitly to you then it won't be counted as your capital until the estate is administered. It should be ok to take a bigger share of the house in lieu of the cash before administration. But it's possible UC DMs might try to claim you've deprived yourself if the cash element (there is a rule which says exchanging a regarded form of capital for a disregarded one can be classed as DoC).

Inherited capital is covered in ADM H1, H1169 to 1179. I've not read the legislation behind this but you will want to familiarise yourself with that too. H1175 talks about giving up capital via a DoV before administration still being counted. And I think you should get a DoV agreed if you aren't splitting the estate down the middle (as presumably the will has specified). You're proposal to take all of those is clearly a variation from half the estate. So it may come down to how the DoV is worded. And take professional legal advice (from someone who is familiar with benefits legislation).

In the first instance you should check with your brother explicitly that he is happy to forgo some of his share of the inheritance. So many stories of miscommunication or understanding of what each other means. You wouldn't want that to unravel at a critical moment. You've said your brother does quite well and isn't really interested in the house and he's asked you if you want to live there. Which doesn't sound like he's out and out said he's ok about giving up 80k of his inheritance to you.

You should also consider making sure you've moved into the house before the estate is administered, so that it's disregarded capital from day 1 of your ownership. Otherwise you'd have to declare it to UC at that point and it would likely terminate your UC entitlement until you do move in.

kaMelo

That's actually a very good point @ElwoodBlues, one I'd overlooked, about moving into the property before probate is granted.

There is no disregard for inherited property you don't live in so once probate is granted the UC claim would end.

[Deleted User]

ElwoodBlues said:

As the items in the estate (house and cash)  haven't been bequeathed explicitly to you then it won't be counted as your capital until the estate is administered. It should be ok to take a bigger share of the house in lieu of the cash before administration. But it's possible UC DMs might try to claim you've deprived yourself if the cash element (there is a rule which says exchanging a regarded form of capital for a disregarded one can be classed as DoC).

Inherited capital is covered in ADM H1, H1169 to 1179. I've not read the legislation behind this but you will want to familiarise yourself with that too. H1175 talks about giving up capital via a DoV before administration still being counted. And I think you should get a DoV agreed if you aren't splitting the estate down the middle (as presumably the will has specified). You're proposal to take all of those is clearly a variation from half the estate. So it may come down to how the DoV is worded. And take professional legal advice (from someone who is familiar with benefits legislation).

In the first instance you should check with your brother explicitly that he is happy to forgo some of his share of the inheritance. So many stories of miscommunication or understanding of what each other means. You wouldn't want that to unravel at a critical moment. You've said your brother does quite well and isn't really interested in the house and he's asked you if you want to live there. Which doesn't sound like he's out and out said he's ok about giving up 80k of his inheritance to you.

You should also consider making sure you've moved into the house before the estate is administered, so that it's disregarded capital from day 1 of your ownership. Otherwise you'd have to declare it to UC at that point and it would likely terminate your UC entitlement until you do move in.

Heres what i have found, and this was also backed up by the Citizens Advice.

"What happens if I'm renting and inherit a property?

If you've inherited a property and are planning to live in it as your primary residence, you don't need to worry about it affecting your benefits right away. For the first six months, the value of the property won't be counted, which gives you enough time to move out of your rented home without any changes to your benefits.

Once you start living in the inherited property as your main home, the value of the property will be "disregarded" indefinitely. This means that it won't be counted as part of your savings, so you won't have to worry about it affecting your means-tested benefits."

I think even if i was to get 50% of the liquid assets i could put that towards buying out my brothers half of the property, and that is allowed by DWP. So in essence my choice to take on the house rather than the cash would more a less be the same thing.  Also, once probate is granted the house does not automatically transfer into new ownership. Actually the home doesnt need a deed change until it is being sold. Also, DWP allows 6 months to take on the house and move in, so there is no urgency once the probate is granted.  I think the DWP is quite reasonable as long as they are in the loop to what your intentions are. 

Spoonie_Turtle

Well I never, I'd not noticed that before.
From ADM H2:

"Premises intended to be occupied
H2111 Premises that a person intends to occupy as their home shall be disregarded in calculating that person’s capital where the person
1. has acquired the premises within the last 6 months but has not yet taken up occupation or
2. is taking steps to obtain possession and they began those steps within the past 6 months or
3. is carrying out essential repairs or alterations in order to make the premises fit for occupation and these have been commenced within the last 6 months1.             1 UC Regs, Sch 10, para 4(1)"

^ The initial disregard is up to 6 months but can be extended if the DM decides it's reasonable to do so.