Death in service benefit and the effects on UC

Bertandernie123

Good morning

My good friend lost his wife to a brain tumour in May 2024 - she was 36. She left a husband and two children under the age of 10

Since her death, my friend has had to give up work to look after the children and is now in receipt of Universal Credit and Housing Benefit

His wife was a nurse and the NHS has advised him that her death in service lump sum of £58000 will soon be paid - there will also be a monthly pension of approximately £250

On her deathbed, she stipulated that the death in service lump sum should be allocated to the children so safeguard their futures. Sadly, she was in no fit position to make a will and her death was far earlier than anticipated so no will was put in place

Would I be right in assuming that the lump sum payment will completely wipe out the husband's entitlement to Universal Credit, leaving him without any income or benefits or is there a way around this dilemma?

Many thanks

Bertandernie123

sammyjammy

So sorry for the loss, such a hard situation.  If her death in service forms state her husband as the recipient then thats how it will be administered. Could the money be used to repay debt/mortgage?  Is he receiving widows parent allowance?

peteuk

I would say that the lump sum will be paid to the NOK (Usually spouse - unless otherwise noted) at which point as your friend is claiming UC then it would be classed as capital.  

As there is no will stating the monies is to be set into a trust fund for the children, then once the husband has the lump sum if he then puts it into a trust fund it will be seen as DoC.  Now there may be a period in which this lump sum is disregarded and someone wil far more knowledge will advise you on that.

Is there a mortgage he could pay off or other debts? - I assume no mortgage as claiming housing element of UC.

Bottomline is he will need to actively seek employment, the children (under 10 - but no specific ages) will affect the amount of hours he is meant to be seeking. This is part of his UC agreement. (30 hours a week if children between 3 and 12)

If there is no disregard for the lump sum then his UC claim will stop as he has over £16K in capital, and he will only be able to reclaim this once that capital is reduced to below £16K.

DullGreyGuy

She will have most likely filled in a nomination form which will tell the trustees who it is to be paid to. 

They will have £58,000 to live on, which is the idea of a death in service benefit, and once that drops below £16,000 and if their circumstances haven't improved then tax payers can help again with UC

poppy12345

There's no disregard for the lump sum. Once their capital drops below £16,000 they can reclaim UC but their pension will reduce their UC £1 for £1 because it's treated as "other income." 

LightFlare

Death in service benefit defaults to spouse UNLESS another person(s) is named

Was having this discussion with a colleague a while ago who has been separated (but not divorced) for a number of years

Bertandernie123

sammyjammy said:

So sorry for the loss, such a hard situation.  If her death in service forms state her husband as the recipient then thats how it will be administered. Could the money be used to repay debt/mortgage?  Is he receiving widows parent allowance?

He is in rented accommodation so no mortgage. He received the full Bereavement Support Payment and is receiving the monthly payments for 18 mths following his wife's death 

Thank you for replying sammyjammy

Spoonie_Turtle

peteuk said:

Bottomline is he will need to actively seek employment, the children (under 10 - but no specific ages) will affect the amount of hours he is meant to be seeking. This is part of his UC agreement. (30 hours a week if children between 3 and 12)

Just for future reference, there's a six month period after bereavement (of a partner or child) when claimants must not have any work search requirements imposed.
[ADM chapter J3, para J3200]

Obviously in this case we're nearing the end of that 6 months, although a work coach can use their discretion to ease or turn off requirements beyond the 6 months if need be.

peteuk

Spoonie_Turtle said:

peteuk said:

Bottomline is he will need to actively seek employment, the children (under 10 - but no specific ages) will affect the amount of hours he is meant to be seeking. This is part of his UC agreement. (30 hours a week if children between 3 and 12)

Just for future reference, there's a six month period after bereavement (of a partner or child) when claimants must not have any work search requirements imposed.
[ADM chapter J3, para J3200]

Obviously in this case we're nearing the end of that 6 months, although a work coach can use their discretion to ease or turn off requirements beyond the 6 months if need be.

Thanks for the info/correction, but moving forward once he is back down to £16K he will need to seek 30 hours of employment depending on the children’s age.  

Bertandernie123

Yes, the children are 10 and 7

DE_612183

If the money ( all except ) £16k is paid into a trust for the children when they reach 18, or a pension in his name - does UC still stop, or does it stop and then restart?