Benefits and inheritance

Evolwen

Hi everyone - I'm looking for some advice re: benefits and how an inheritance would impact those benefits.
Background: my mum was unfortunately diagnosed with terminal lung and brain cancer last year and has recently had a seizure which has outwardly given her symptoms of dementia - she doesn't know where she is and seems to have waking hallucinations where she's talking to long-dead relatives. It's sometimes inadvertently funny and usually very sad. 
We'd set up power of attorney a few years ago so I now control the finances as mum no longer has capacity. I am also the sole executor of the will, and know that the will states that proceeds from the estate should be split between the three of us kids (excluding some small and inexpensive jewellery that goes to my sister). 
I'm not on benefits, but my siblings are, and once mum finally passes, her old house will be sold (my dad died 10 years ago, mum never re-married). The house will be worth a maximum of £150k so no inheritance tax to worry about. There's also some home equity of around £50k that would need to be repaid before anything else. I'm expecting that there should be between £20k and £30k for each of us 3 children.
My understanding is that my siblings benefits will stop entirely as it's over £16k and my assumption is that once they've used some of the money, and the figure gets under £16k, they would then have to re-apply for the means-tested benefits they are currently on.
Are there any legal alternatives for them to avoid losing their benefits - could the money go straight to their children, for example, or be put in some kind of trust?
I'm not trying to game the system (though I appreciate it may seem that way), I just think that they could end up actually being worse off if it takes a long time for a new benefits application to bed in once the house money has gone.
Any advice would be greatly appreciated and happy to provide any further information if needed.
 

HillStreetBlues

The will would have to have stated money going to grandchildren but as your mother has lost capacity then it can not be changed if there is one.
There is no away round avoiding loss of income related benefits for £20-£30k. If they gave it to their children it would be classed as deprivation of capital and would be treated as though they still had the money.

elsien

No, not with the will as it stands. Any variation to give the money away to maintain benefits would count as deliberate deprivation of assets and they would be treated as if they still had the money. 

Spoonie_Turtle

Just to check, which benefits exactly do they claim?  Not all are means-tested.

elsien

Also to add that  they will still have savings in the bank when they are eligible to reclaim so even if it takes a little longer to start another claim they are not going to be penniless during that period.

Evolwen

Spoonie_Turtle said:

Just to check, which benefits exactly do they claim?  Not all are means-tested.

I know one gets carers allowance for their partner, there's also housing benefit and PIP involved. I know the non-income benefits aren't affected but it seems from the other answers, they will have to stop claiming for a while. 

Spoonie_Turtle

If they are under pension age then any income-based benefits that stop will most likely have to be reclaimed as the Universal Credit equivalent.  The first payment takes 5 weeks from starting the claim (and they should put the claim in as soon as their savings drop to £16,000).

The only potential difficulty is if any of them currently claim income-based ESA, or UC with the LCWRA element.  In that case they should make sure to claim NI credits on the basis of limited capability for work, to keep their current LCWRA status - I know it's possible but I don't know exactly how they would go about it in practice.

FIREDreamer

Presumably £2,880 net into a pension and same for a spouse would reduce the assets by £5,760 would help if the inheritance was £20k as it would be under £16k left. Same again the following tax year if needed?

Don’t think pension contributions are deprivation of capital.

frayedknot

It's far from an immediate concern, your mother's still alive. Then there's probate and the whole pallaver of selling the house which can drag on for months, sometimes even years, so it's going to be at least a year before the executor can distribute any money.

You don't say if your mother may need to go into  care which could wipe out a lot of her money.

peteuk

From recent experience - you will need to got through probate for the house.  You can put the house on sale pending probate but cant sell it until the probate has been passed.  If as it sounds there is a will, it will still need to go through probate.   It took us over a year to sell Dads house. 

You mention theres a £50K equity, which needs paying - do take a deeper look at this as there may be criteria set on the repayment of this. 

Which as youve noted leaves £20-30K for the three children.  Equally youve correctly noted capital of over £16K stops means tested benefits.  There are ways to reduce the capital without being penalised eg paying off debt.

Ideally for greater support you would need to clarify which benefits they are on.