Inheritance, Housing benefit/Council tax benefit and debt

viksviks84

Hi 

I'm hoping someone can help me.

My mum recently retired in June. She only has a state pension and has been granted housing and council tax benefits.

In May, she inherited 28k from her mum, although she owed about 16k in debt to her sister and me.

She then paid for a funeral plan (3k). Which means she has less than 10k left (which is what you are allowed in savings to receive benefits).

The local council have asked for bank statements. I'm worrying that they'll revoke her benefits because she paid her debts off.

Does anyone have experience with this or any knowledge that can help me?

TIA!

Rubyroobs

I guess they would need some proof of the debt otherwise it could be considered that she has just given the money away and deprived herself of 16k in order to continue claiming benefits. Do you have any written proof/ agreements that she had a loan from you and your sister? She is fine with the funeral plan I think and would not likely be considered deprivation of capital. I have experience of helping a client who was convicted of benefit fraud by the council as he could not show where proceeds of a house sale had gone. They wanted the whole HB that he had been paid  back plus a large penalty fine to stop it going to criminal court.. He claimed it had gone to pay off debts but could  not provide proof unfortunately so they did not accept it. I do think councils are getting stricter on this kind of thing, especially our local ones as they are near bankrupt !
Unfortunately I think if she can't prove a debt was owed she will struggle. The good thing is that it hasn't been going on for long so if they do rule that she has deprived herself of capital she won't have much to pay back.

Muttleythefrog

As above I think this will come down to proving legitimate debts and that is was reasonable to pay them off.

HillStreetBlues

I agree with the above, but as it's an inheritance you have more leeway than other methods of gaining capital.

Keep_pedalling

HillStreetBlues said:

I agree with the above, but as it's an inheritance you have more leeway than other methods of gaining capital.

In what way?

viksviks84

When her sister loaned her the money, a letter was drawn up and signed between them at the time, but there wasn't anything witnessed by a solicitor or anything. These debts were outstanding for 15 years, the loan was contingent on it being paid back as soon as the inheritance came through.

When I loaned her the money there was nothing drawn up. She did give me a bit extra to buy a car and she always said when granny died she'd give me some.

What will actually happen if she can't afford to live on her state pension?

I'm really worried about this.

viksviks84

Muttleythefrog said:

As above I think this will come down to proving legitimate debts and that is was reasonable to pay them off.

What is 'reasonable' and how do we prove that it was. Is there a definition of reasonable

viksviks84

Rubyroobs said:

I guess they would need some proof of the debt otherwise it could be considered that she has just given the money away and deprived herself of 16k in order to continue claiming benefits. Do you have any written proof/ agreements that she had a loan from you and your sister? She is fine with the funeral plan I think and would not likely be considered deprivation of capital. I have experience of helping a client who was convicted of benefit fraud by the council as he could not show where proceeds of a house sale had gone. They wanted the whole HB that he had been paid  back plus a large penalty fine to stop it going to criminal court.. He claimed it had gone to pay off debts but could  not provide proof unfortunately so they did not accept it. I do think councils are getting stricter on this kind of thing, especially our local ones as they are near bankrupt !
Unfortunately I think if she can't prove a debt was owed she will struggle. The good thing is that it hasn't been going on for long so if they do rule that she has deprived herself of capital she won't have much to pay back.

Would a letter signed by me and a separate one by her sister be enough? 

Rubyroobs

viksviks84 said:

Rubyroobs said:

I guess they would need some proof of the debt otherwise it could be considered that she has just given the money away and deprived herself of 16k in order to continue claiming benefits. Do you have any written proof/ agreements that she had a loan from you and your sister? She is fine with the funeral plan I think and would not likely be considered deprivation of capital. I have experience of helping a client who was convicted of benefit fraud by the council as he could not show where proceeds of a house sale had gone. They wanted the whole HB that he had been paid  back plus a large penalty fine to stop it going to criminal court.. He claimed it had gone to pay off debts but could  not provide proof unfortunately so they did not accept it. I do think councils are getting stricter on this kind of thing, especially our local ones as they are near bankrupt !
Unfortunately I think if she can't prove a debt was owed she will struggle. The good thing is that it hasn't been going on for long so if they do rule that she has deprived herself of capital she won't have much to pay back.

Would a letter signed by me and a separate one by her sister be enough? 

The problem is that literally anyone could say anything to get their relative off the hook couldn't they? I imagine they would want some documentation from when the loan was agreed. I have no idea how the council would investigate. Sorry.

HillStreetBlues

Keep_pedalling said:

HillStreetBlues said:

I agree with the above, but as it's an inheritance you have more leeway than other methods of gaining capital.

In what way?

Case Law https://www.bailii.org/uk/cases/UKSSCSC/2007/CIS_1775_2007.html
Bit more on DoC here https://gardencourtchambers.co.uk/the-deprivation-of-capital-rule-in-welfare-benefits/

A person isn't expected to to spend all their inheritance on just day to day spending, they can spend it other ways.

elsien

Not by giving it to their children, though. 

What money did you give your mother and was it used for anything specific?