Inheritance Coming Through, Possibly £300,000.. Tax?

thevoyager

Hi.

We have possible inheritance coming in, a mixture of savings, investments and a house sale. (Maybe around £300k) if house sells but vould be £280k etc.

It will be going to a pensioner, and I am wondering what the deal is here, could this effect said pensioners state pension and housing benefit? To my knowledge the money will be split between key family members, so said pensioner will not have £300k in the bank sitting there.

Would love to know possible issues to be aware of. Of course we would seek financial advice / advisor.

Thanks.

Keep_pedalling

It won’t effect there state pension, but it would stop pension credit if they are on it and it will stop housing benefit. Giving it away is not an option as that would be deemed as deliberate deprivation of assets.

elsien

Your post isn’t entirely clear but hiding money due to one person between family members in order to retain means tested benefits would also be deprivation of capital and fraud.

thevoyager

https://forums.moneysavingexpert.com/discussion/comment/81891811#Comment_81891811

I am not suggesting anyone commits fraud.

I just want to know, if said pensioner receieves either £300k or half of that, I just want to know how it would effect their pension or housing benefit or any aspect of their current state income. There is a good chance that said pensioner is likley to share this between her family, so might be left with a lot less, I am unclear what they intend to do but it's worth being aware of all eventualities.

If there are ways to do this legally with tax avoidance with loopholes (rather than evasion) well I am well within my right to ask and enquire.

Keep_pedalling

Tax does not come into the equation. If there is any IHT due it will be payed by the executor / administrator before distribution the beneficiaries pay no tax.

Receiving a 6 figure sum from an inheritance will end all means tested benefits.

SiliconChip

https://forums.moneysavingexpert.com/discussion/comment/81891753#Comment_81891753

I'd agree with this if the beneficiary receives the inheritance and then gives it away, but what if a deed of variation is used to redirect the money to someone else so that it never comes to the original beneficiary in the first place? Would that overcome the issues the OP seems to be concerned about?

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81891909#Comment_81891909

A deed of variation would still be giving it away and is still DDoA. The only purpose of a DoV is to avoid the inheritance entering your estate for IHT purposes.

elsien

If they share it between their family and that means they still claim means tested benefits either now or in a reasonably foreseeable future, that would still be deprivation of capital.

Baldytyke88

If a person has more than £16,000 in savings, they will not qualify for housing benefit.

Savvy_Sue

State pension is not means tested, so that will always be there.

ANYONE - but perhaps especially someone of more advanced years - lucky enough to receive an inheritance should first ensure that their own current and future needs are met.

Are they fit and well, living in a property which is well suited to their current and future needs? Is the garden easy to care for? Are the kitchen and bathrooms convenient and well appointed, taking into account that leaping in and out of a bath may not be possible for ever? Those are all things I'd want to deal with before I gave any money away.

If it's clear that staying in this property is unlikely to be sensible for the remainder of my life, what do I need to move onto? Does residential care look likely (eg if I am already struggling with stairs / chronically unwell / suffering with a condition which means my health will deteriorate)?

What resources do I already have? With this inheritance, will that be enough to 'see me out'? Residential care can be eye-wateringly expensive, but being able to CHOOSE your care options is priceless.

I can then leave what's left on my death to the rest of the family in my will …

thevoyager

https://forums.moneysavingexpert.com/discussion/comment/81891944#Comment_81891944

Yep agreed, these are sensible considerations.

So it seems that a lot more thought will need to go into this pensioner housing benefit situation then. They have worked all their life and have a simple retirement, don't ask for much. This money will be a nice pillow for them to rest on for sure, but I had an inkling that it would interfere with their HB.. I think it's worth consulting a financial advisor.

Has anyone used one for stuff like this? Do they work on the hour or day? What would we be likely to pay for advice?