Universal Credit, Separation and Capital

Muttleythefrog

Possible situation ahead I need advice on:

- Married couple in receipt of Universal Credit including LCWRA (me) and Carer Element (her) plus help towards housing costs (maintenance fees)
- Jointly own our leasehold flat
- Separation being considered and it is possible we will soon declare informal separation
- Intention is to co-reside in the property we both own until and unless my parents or estranged wife (at a future time) can fund me to buy and move to new property. She will likely remain indefinitely in our current property.
- Partner wants to cease any claim for Universal Credit if separating but I wish to maintain my claim as single person
- I get PIP and C-Based ESA which I assume to remain in payment barring rule changes
- Council Tax Support looks complicated an issue and I'm not particularly concerned if losing out on that
- She is anticipating significant inheritance and so not particularly concerned for income
- Ultimately I imagine it will end in divorce and to be honest neither of us fundamentally support the idea of any marriage anyway (thanks to our immigration rules it was forced on us and probably fatally damaged our relationship chances)

Assuming Universal Credit do allow me to claim as single person, my estranged wife to stop claiming, and they are satisfied we are no longer a couple for assessment purposes: 

Q1. If my parents (or estranged wife) were to specifically allocate me monies to buy a new home would I be able to continue getting Universal Credit as a single person after moving. I am concerned my share of the property we currently live in (circa value £65000 if half market value) will be considered capital - do you think it would be and would that be after 6 months?

Q2. How do you think Universal Credit would treat a separation arrangement (informal or legally binding) that included me giving up my share of our current home which I would no longer be living in having moved to a newly purchased property? Would they potentially consider it deprivation of capital?

Any other advice welcome including things maybe I have not considered (now addicted to opiates amidst endless pain it's difficult to think clearly for much time). Not a situation I expected to be facing but I see it in positive terms and just want to understand issues I'd never previously considered as we figure out a practical way forward for both of us. 

Rubyroobs

Any share of a property you do not live in will be classed as capital, so if you continue to own half of the flat and that share is worth over 16k then you would not be able to claim UC anymore. You could continue to claim CB ESA and PIP. You cannot just give away half an asset without it being considered deprivation of capital. The six month rule applies to if you are waiting for the property to be sold - if this will be the case then it could be disregarded but once sold you would still have over 16k capital so UC would cease. Without any rent element on your UC claim, the amount you would be likely to get from UC wouldn't be hugely different to your CB ESA amount anyway, maybe a couple of hundred pounds a month ( just a rough calculation and I appreciate a couple of hundred is significant when on a low income ). 

Muttleythefrog

Rubyroobs said:

Any share of a property you do not live in will be classed as capital, so if you continue to own half of the flat and that share is worth over 16k then you would not be able to claim UC anymore. You could continue to claim CB ESA and PIP. You cannot just give away half an asset without it being considered deprivation of capital. The six month rule applies to if you are waiting for the property to be sold - if this will be the case then it could be disregarded but once sold you would still have over 16k capital so UC would cease. Without any rent element on your UC claim, the amount you would be likely to get from UC wouldn't be hugely different to your CB ESA amount anyway, maybe a couple of hundred pounds a month ( just a rough calculation and I appreciate a couple of hundred is significant when on a low income ). 

Thanks.,.. yeah circa £300 a month difference (if she claimed Carers Allowance and gave it to me..lol... if I could persuade her.. if not then maybe double that so realistically a loss of £600 a month depending on what is compared as obviously she was getting carer element technically).. I assume I'll be moving to similar property with similar maintenance fees I could get some back for on UC. It would be a shame if they did consider my joint ownership as I don't think I could force a sale to get my share... I could try to get it built into an agreement though when she gets an inheritance she can pay up. Or.. not something I want to do.. she could transfer her equity to me of this property (after all I funded it with sale of my house) and she can go buy another...lol

NedS

Rubyroobs said:

Any share of a property you do not live in will be classed as capital, so if you continue to own half of the flat and that share is worth over 16k then you would not be able to claim UC anymore. You could continue to claim CB ESA and PIP. You cannot just give away half an asset without it being considered deprivation of capital. The six month rule applies to if you are waiting for the property to be sold - if this will be the case then it could be disregarded but once sold you would still have over 16k capital so UC would cease. Without any rent element on your UC claim, the amount you would be likely to get from UC wouldn't be hugely different to your CB ESA amount anyway, maybe a couple of hundred pounds a month ( just a rough calculation and I appreciate a couple of hundred is significant when on a low income ). 

Additionally, the property can be disregarded for 6 months following separation from a wife or partner if they are still living at the property (no requirement to sell or try to sell). After that, you would have been expected to realise your share of the capital either through the sale of the property, or your former wife/partner buying out your share.

See H2114:

https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

Premises ceased to be occupied
H2114 Where a person has ceased to occupy premises as their home following estrangement from their
former partner, those premises can be disregarded from the calculation of that person’s capital where
1. the person has ceased to occupy those premises within the past 6 months

Muttleythefrog

NedS said:

Rubyroobs said:

Any share of a property you do not live in will be classed as capital, so if you continue to own half of the flat and that share is worth over 16k then you would not be able to claim UC anymore. You could continue to claim CB ESA and PIP. You cannot just give away half an asset without it being considered deprivation of capital. The six month rule applies to if you are waiting for the property to be sold - if this will be the case then it could be disregarded but once sold you would still have over 16k capital so UC would cease. Without any rent element on your UC claim, the amount you would be likely to get from UC wouldn't be hugely different to your CB ESA amount anyway, maybe a couple of hundred pounds a month ( just a rough calculation and I appreciate a couple of hundred is significant when on a low income ). 

Additionally, the property can be disregarded for 6 months following separation from a wife or partner if they are still living at the property (no requirement to sell or try to sell). After that, you would have been expected to realise your share of the capital either through the sale of the property, or your former wife/partner buying out your share.

See H2114:

https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

Premises ceased to be occupied
H2114 Where a person has ceased to occupy premises as their home following estrangement from their
former partner, those premises can be disregarded from the calculation of that person’s capital where
1. the person has ceased to occupy those premises within the past 6 months

Thanks... I had read that guidance but wanted confirmation from other eyes as I was struggling to read the whole text without losing focus due to pain. It could buy time to figure out my next steps while having income. What I could do is hope she can resolve her inheritance in that time, buy me out, parents help me out with shortfall and I can buy my own property... at which point presumably there would be considered no capital as I would dispose of it into my home.

kaMelo

Q1.
There is a six month disregard for the capital value of a former home that you cease to occupy following estrangement. You don't mention children (and I'm not asking) but if your former partner will be a lone parent living in the home the capital disregard is indefinite.

Se H2114,
https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

Q2,
Other than a disregard if selling the property, after six months I don't see any way to avoid having the equity considered part of your capital. . It's not my call obviously and would be down to a decision maker but even if the circumstances mean it's reasonable to do so, for benefit purposes just giving away the equity in your former home would almost certainly be considered deprivation

PS
Sorry to hear this.

Muttleythefrog

kaMelo said:

Q1.
There is a six month disregard for the capital value of a former home that you cease to occupy following estrangement. You don't mention children (and I'm not asking) but if your former partner will be a lone parent living in the home the capital disregard is indefinite.

Se H2114,
https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

Q2,
Other than a disregard if selling the property, after six months I don't see any way to avoid having the equity considered part of your capital. . It's not my call obviously and would be down to a decision maker but even if the circumstances mean it's reasonable to do so, for benefit purposes just giving away the equity in your former home would almost certainly be considered deprivation

PS
Sorry to hear this.

Thanks... and yes we have no children... I suppose I could try it the other way around (but many of my problems are caused by the disaster of what she has done to the home while having written me out of it.. it'll be hard to evidence to any DWP inspector that we live separate lives here when it doesn't look like I live here at all)... she could transfer her share of equity to me and get her own place. But yeah... that's life...and unexpected poor physical health all year has put into sharp focus that I want a future on my terms.

HillStreetBlues

Muttleythefrog
Sorry to hear it's not worked out, so many rules to follow it's would put a strain any relationship.

For me 1&2 are interlinked.
When you talk about parents (or estranged wife)  allocate you monies to buy a new home,  you are talking about either a loan or a gift.
Then you talk about then gifting your share in your current property.
If your estranged wife allocate the money then at least the value of your current home needs to be a loan, once you buy your new home, signing over the current home will be a repayment of the debt.
Same with your parents, but then your would need to sign it over to them to repay the loan.
 

Yamor

There is always a possibility that your share could be valued at lower than £16k. Plenty of case law on the issue...

Muttleythefrog

Yamor said:

There is always a possibility that your share could be valued at lower than £16k. Plenty of case law on the issue...

Oh.... what factors can bring it down aside from things like mortgage owed? We own the leasehold property outright... realistically its market value is what we paid.. so £130k. Are you thinking of legal agreements for separation or divorce that distribute different share as part of the overall agreement?

Muttleythefrog

HillStreetBlues said:

Muttleythefrog
Sorry to hear it's not worked out, so many rules to follow it's would put a strain any relationship.

For me 1&2 are interlinked.
When you talk about parents (or estranged wife)  allocate you monies to buy a new home,  you are talking about either a loan or a gift.
Then you talk about then gifting your share in your current property.
If your estranged wife allocate the money then at least the value of your current home needs to be a loan, once you buy your new home, signing over the current home will be a repayment of the debt.
Same with your parents, but then your would need to sign it over to them to repay the loan.
 

Yeah you're not kidding.. the admin alone has been tough..lol.

Parental gift it would be (specifically to buy home to live in).... and if wife was involved I would say she'd be buying me out of my half share and remain in our current property owning it alone

Would it not be a case of effectively me selling my share of our home, receiving also a gift to make up shortfall then buying ASAP a new property to live in which would be capital discounted? Are you thinking I would need to set their contributions in effect as loans to be repaid (to avoid deprivation of capital) or am I misunderstanding?