Inheritance in a trust and UC

marywooyeah

Hello,

My father passed away last year and left the house in a trust which provides that my stepmother continues to live in the house as a life tenant and is entitled to 50% of the house, and the other 50% will go to me, my three brothers and another third party when the house is sold after my step-mother dies.  One of my brothers is dealing with the probate and has in the last few days stated that a second trust will be set up so that our collective half share of the property will go into a trust so that when my step-mother dies and the house is sold we will each receive a one fifth share of half of the proceeds of sale, with the other half share to be passing in my step-mother's will as she wishes, and that something will be done at the land registry to show that we are entitled to 50% of the property but I'm not sure of all the terminology and ins and outs of the process.

I receive the carer's element of UC as I have two disabled children and am now worried that this will be classed as owning capital, when in reality I have no way to access any of this money or share of the property as it will be in a trust until my step-mother dies, which could be another 30 years or so as she is only in her late 50s.

I would be very grateful for any advice.  My dad never discussed anything with me about his will or what would happen with the house so it's all come as a shock on top of his death.

peteuk

Not 100% sure but if someone is living in the house then it doesn't go to probate. 

Equally if your step mum is living it the property, it automatically transfers to her.  Only on her passing will you gain 50% (shared as detailed).  On her passing then it will go to probate and the will of both your father and step mother will be taking into consideration.

What are the terms of the trust fund?  You will need to declare this as it can be seen as DoC and as such a DM will then look at it and make a judgement.   Any funds earnt from the trust fund can be viewed as unearned income and so may be deducted from your UC accordingly.  But this all goes on the terms of the fund and your access or ability to access the funds. 

marywooyeah

Hi, thank you for your comment.  All I know is what I posted above, my brother is handling everything but he definitely said it would go to probate.  I just personally can't see how an asset in a trust that I have no access to or no control over could rightly be said to be capital and mean that I cannot receive the carer's payments anymore.  Life is so stressful raising two disabled children on my own and the UC is a Godsend and a lifeline that I rely on each month.

Rubyroobs

marywooyeah said:

Hi, thank you for your comment.  All I know is what I posted above, my brother is handling everything but he definitely said it would go to probate.  I just personally can't see how an asset in a trust that I have no access to or no control over could rightly be said to be capital and mean that I cannot receive the carer's payments anymore.  Life is so stressful raising two disabled children on my own and the UC is a Godsend and a lifeline that I rely on each month.

Your Uc claim is more than just the carers element though it is the whole award made up of all the components- standard element, child elements, disabled child elements and carers element. If you have capital over 16k the whole award would stop but I'm sure if you can't access this there is some way of it being disregarded, as like you say you can't access it through no fault of your own. I guess the only other alternative is for the step mum to buy the kids out of your share of the house. How much is your fifth of the property actually worth ? As above it would need to go to a decision maker but I think likely won't be an issue.

gbhxu

peteuk said:

Not 100% sure but if someone is living in the house then it doesn't go to probate. 

Equally if your step mum is living it the property, it automatically transfers to her.  Only on her passing will you gain 50% (shared as detailed).  On her passing then it will go to probate and the will of both your father and step mother will be taking into consideration.

What are the terms of the trust fund?  You will need to declare this as it can be seen as DoC and as such a DM will then look at it and make a judgement.   Any funds earnt from the trust fund can be viewed as unearned income and so may be deducted from your UC accordingly.  But this all goes on the terms of the fund and your access or ability to access the funds. 

Wouldn't need probate if the property goes 100% to Step-Mother.

Probably have to go through Probate twice.

1st Time - 50% of house to Step Mother and 5 joint owners with 10% each
Will also need to notify Land Registry of change of ownership

2nd Time - Step Mother's 50% divided by the other 5 joint owners. Joint owners now own 20% of house each
Will also need to notify Land Registry of change of ownership (removing Step-Mother from ownership)

marywooyeah

Hi gbhxu - thank you for that.  Does this mean that it will be disregarded for UC purposes please?

Thank you 

peteuk

marywooyeah said:

Hi gbhxu - thank you for that.  Does this mean that it will be disregarded for UC purposes please?

Thank you 

Once through Probate (as noted by gbhxu) you will own a percentage of the house. Therefore I would suggest you declare it. 

At the point of probate being issued you will own a percentage of half the house, this may be discounted because you don't have access to the capital and given that your step mother still lives in it.  

You say its being put into a trust fund, and you've said you've no access to it.  However I would suggest that owning part of 50% of a house and not knowing what your step mother will do with the other 50%, it would be easier to sell then maintain. But that will be be between you and the other 5+ owners. 

at that point it will certainly effect your UC, if you have capital over £6K and will stop your claim if over £16K

Yamor

How old is your step mother?

marywooyeah

Hi Pete - am I correct in understanding your post to mean that once the house is sold it will affect UC?  I think that will be the case, what I am worried about is whether my UC will be affected whilst the share of the house remains in trust.  The house can't be sold as she has nowhere else to go, moved from Turkey to be with my dad and his will was that she remained in the house as a life tenant.  

Yamor - I think she is late 50s, I will ask for her DOB to double check though

Yamor

Unless she could be 66, there's no point checking.

Any chance she's on any benefits herself? UC or ESA?

peteuk

marywooyeah said:

Hi Pete - am I correct in understanding your post to mean that once the house is sold it will affect UC?  I think that will be the case, what I am worried about is whether my UC will be affected whilst the share of the house remains in trust.  The house can't be sold as she has nowhere else to go, moved from Turkey to be with my dad and his will was that she remained in the house as a life tenant.  

Yamor - I think she is late 50s, I will ask for her DOB to double check though

Once the house is sold, where does the money go to?  If the monies you are due are put into a trust fund then what are the rulings with regard to accessing this.  
However in theory you have capital over £16K  (making the house price minimum £160K) in a house that you do not life in, so it could effect your UC once the probate comes through.  Once declared the decision maker will rule on this, the positive is you are one of six owners, one of whom is currently living in the property and so you would need the five other parties to agree to sell in order for you to access that capital, however its the DM decision. 

You either declare it and take the decision from the DM or dont declare it and risk at a later date having to pay back UC that you might not be entitled to.