UC and inheritance?

blackstar

Hi all,

My mother is writing her will in relation to her house.

She wants to leave something for our children but she wants it to go into a trust that they can't open until they are 18 years of age. Can this still be done? And if so how? What kind of trust?

Looking into maybe a deeds of variation and/or a pension of some kind as we don't have a pension at all, My wife has paid into one but not much. We have two disabled children too who we will be caring for even after 18. 

Could we use it to pay a chunk off our mortgage? Or would they say that's deprivation of capital?

She is wondering how she should go about giving me her share. In other words when she does pass away she has asked me if it will affect our UC. Which I am guessing the house will be sold and then a portion of it given to my wife and I. She has asked  what type of account should it go into for us when the time comes in terms of UC. 

I have heard that she could put it into a trust for us and it won't affect UC?

Thanks all

HillStreetBlues

blackstar said:

Hi all,

My mother is writing her will in relation to her house. She is wondering how she should go about giving me her share. In other words when she does pass away she has asked me if it will affect our UC. Which I am guessing the house will be sold and then a portion of it given to my wife and I. She has asked  what type of account should it go into for us when the time comes in terms of UC. 

I have heard that if we gain inheritance then we have 6 months or something to pay off our mortgage or what are the rules on inheritance and what's the advice in terms of UC?

Thanks all

There is no 6 months, when the money is available to you then it's counted.
If you inherit the actual property you are given time to sell it.

kaMelo

blackstar said:

Hi all,

My mother is writing her will in relation to her house.

She wants to leave something for our children but she wants it to go into a trust that they can't open until they are 18 years of age. Can this still be done? And if so how? What kind of trust?

Could we use it to pay a chunk off our mortgage? Or would they say that's deprivation of capital?

She is wondering how she should go about giving me her share. In other words when she does pass away she has asked me if it will affect our UC. Which I am guessing the house will be sold and then a portion of it given to my wife and I. She has asked  what type of account should it go into for us when the time comes in terms of UC. 

I have heard that she could put it into a trust for us and it won't affect UC?

Thanks all

 If your mother wants to leave something to your children (her grand chilldren) in trust then that inheritance is your childrens If you are the trustee then you can only spend this money for the benefit of the children, not yourself.

It is important in this scenario that any money goes directly from your mother to your children and not through you.

If she wishes you to inherit something on top of what she wishes your children to have then yes, paying down your mortgage from this should not be classed as deprivation of capital.

As above, there is no disregards for inheritance other than if you can prove you're trying to sell an inherited property.

If none of this can happen until a property is sold it might be better to write the will in a way so the executor sells the house first then distributes the proceeds according to the will rather than you inheriting a property, or share thereof, and then try to sell it.

ETA,

Regarding trusts, there are many different types. Ones for your children can be as simple as a bank/building society account in the child's name with you as trustee. The money belongs to the child but you have oversight until they turn 18 (16 in Scotland) when they are free to access it as they wish. 

Anything more complex than that I would suggest you seek legal advice.

blackstar

Thanks Ka

So if my mother puts in her will that part of the money from the sale of her property goes into a trust for my two children but they can't access it until aged 18 but my wife and I manage the trust for them but we have no access to that money then this will not affect our UC? Correct?

What type of trust should it be?

Other thing is they are autistic and will need care even after 16 years of age, we are in Scotland. So they probably won't be able to be responsible for this even when at 16. So not sure what type of trust is needed for this.
Maybe a VPT so I know a trust for the children that we have no access too won't affect our UC but in the case it's in a VPT we will have to have access to our children's trust as they are not capable of handling their funds even at 16 years of ago due to their developmental conditions. So we have to manage their funds so how will UC see this, surley there must be some guidance for UC on such cases?

When they turn 18 and can access it then does that mean if they are still at home then my wife and Is UC will be affected?

We are both worried also as we have no pension other than a small amount my wife has paid into and we are late 40s and really would have been wise for my mother to put some of what she will leave us in a pension for us. But if that takes away our UC then it will leave us with no real pension other than the state pension. 

What do you think about deeds of variation as an option too?


https://www.weightmans.com/insights/deeds-of-variation-and-deprivation-of-assets/

itsthelittlethings

You can’t put an inheritance into a pension.

kaMelo

Other than a simple bare trust, which is the bank/building society account in a child's name with you as trustee, it is way beyond the scope of my knowledge to advise on any other type. It requires knowledge of the donors full financial circumstances as there are costs to set up, legal aspects and potentially tax liabilities to consider too.

The only thing i can add really is that what is written in the will matters. If the money is left directly to your children then it is never yours,

 if however it is all simply left to you with merely an understanding of what you will do with it then for benefit purposes it is yours, distributing it to your children by just giving it, holding on to it or using a DoV doesn't change anything, it will be classed as still yours.

I refer back to my original post, if the sums are significant your mother should seek legal advice.

Keep_pedalling

Your mother needs to sit down with a solicitor to draft a will that will meet her wishes. There is no need to specify a trust when leaving things to minors, should they still be minors at the time of her death those bequests will have to be held in a bare trust until they reach 18 (unless you all live in Scotland where it is 16) 

Paying off debts with an inheritance is not deprivation of assets, and if your children's inheritance have to be held in trust will not effect your benefits.

toomuchinfo

My son has autism and learning disabilities. We have set up a discretionary trust for him because he will never be able to manage his own affairs. A solicitor drew this up.

Time2count

I would definitely ask your mum to get legal advice on this. It's not just your UC that this could affect. Once your children are over 18 any inheritance they get could affect any benefits they themselves may be on (if relevant) so I would take legal advice on how to have a trust they can access (you can access on their behalf) when they're of age.

andrewmp

If you're left money then you pay it off your mortgage before your next assessment period then it'll be as if it never existed as far as UC goes.

Repayment of debt is never considered deprivation of capital for UC purposes.

blackstar

toomuchinfo said:

My son has autism and learning disabilities. We have set up a discretionary trust for him because he will never be able to manage his own affairs. A solicitor drew this up.

Yes Mencap do a Discretionary trust. What is the name.of this trust? As Mencap appoint their own trustee you have to go though to withdraw funds for your son when he needs something after he's 16 or 18 years of age. 

Does this affect your UC ?