UC Inheritance home improvements & asset depravation

fredisnotmynameokay

I have a joint UC claim with my wife due to my children & her dis-abilities. I can't work due to having to look after them. We currently rent a large house. My wife has a house that is in trust - her stepdad has life rent on the house so that is not counted as hers until such time as her step dad no longer wants/needs it - at which point it's her house as far as UC is concerned - they have been happy with this for years. It is too small for our family, but the house has been in her family for generations. I will be getting a large inheritance as my mum just passed away. I want to use the inheritance to build an extention on the house, so when the time comes it's suitable for our family. I unerstand that using the inheritance for home improvements is allowed. It has been suggested that DWP would consider me spending my inheritance on her house could be seen as a deprivation of assets on my part. But its a joint claim, everything goes into our joint account. We always o tings together. Can someone advise ?

Grumpy_chap

If I read that correctly, your proposal is to spend the inheritance on extending the house that is in trust with lifetime residency for the Step-Dad. That is not the home where you live.

I think that would almost certainly be DoC.

I have a joint UC claim with my wife due to my children & her dis-abilities. I can't work due to having to look after them. We currently rent a large house. My wife has a house that is in trust - her stepdad has life rent on the house so that is not counted as hers until such time as her step dad no longer wants/needs it - at which point it's her house as far as UC is concerned - they have been happy with this for years. It is too small for our family, but the house has been in her family for generations. I will be getting a large inheritance as my mum just passed away. I want to use the inheritance to build an extention on the house, so when the time comes it's suitable for our family. I unerstand that using the inheritance for home improvements is allowed. It has been suggested that DWP would consider me spending my inheritance on her house could be seen as a deprivation of assets on my part. But its a joint claim, everything goes into our joint account. We always o tings together. Can someone advise ?

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/6675511/uc-inheritance-home-improvements-asset-depravation

For my reading of it you could wait to extend, but want to do it now so it reduces your capital, and I would be surprised if a DM didn't reach the same conclusion and that is DoC.

fredisnotmynameokay

I see how that looks now, we're thinking long term.I read somewhere that if I loaned the money (properly drawn up) it wouldn't be a DoC? So would it be reasonable to loan the father-in-law in order for him to extend & improve the house?

kaMelo

https://forums.moneysavingexpert.com/discussion/comment/82062623#Comment_82062623

Where have you read that?

When you receive your inheritance from your mother the money is yours. If this inheritance exceeds £16,000 then you cease to qualify for any means tested benefits such as UC and your claim will close. It is possible to spend some of the inheritance without it being deemed deprivation of capital. As it's a joint UC claim then paying down your or your wife's legitimate debt is never seen as deprivation of capital. Other expenditure will be viewed and decided on a case by case basis.

Spending money maintaining or extending your own home that you live in is likely to be viewed as okay too. Currently your wife does not own the other home, if she did then your UC claim would have already ended. As such, spending money on someone else's home or loaning money to the owner of that home will almost certainly be deemed deprivation of capital as essentially, rather than using your capital to support yourselves you've given your capital away with the intent to maintain or improve your entitlement to a means tested benefit.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82062623#Comment_82062623

Well, if you lend the money, that is the same as putting the money in a savings account and getting interest so you still have the capital.

Spoonie_Turtle

One practical thing to do is for your wife to claim ESA if your UC ends (claim it immediately so there's no gap) and although she may not be entitled to any payments she will keep receiving NI credits on the basis of limited capability for work and will keep her LCW or LCWRA status (whichever is applicable). That way if/when you need to reapply for UC in the future, as things stand she wouldn't automatically need to be reassessed for the disability component.

[If things change and that's no longer the case by the time you need to reapply, then at least you did the best you could according to the circumstances at the time.]

NedS

As others have said, once you receive the inheritance, your UC claim will close if your capital is above £16k.

Once her step-father is no longer living in the house, you can spend the money on extending it and move into it, and at that point if your capital is below £16k you will be able to reclaim UC.

Keep_pedalling

You can’t really spend the money on a property that you don’t own and is occupied by the beneficial owner, that would almost certainly be treated as deprivation of assets. Your wife is classed as a remainderman and does not inherit until his death (or possibly his moving into residential care, depending on the terms of her will). For IHT purposes the house forms part of his estate so this would certainly create significant complications for his estate and his executors.

Would your inheritance be sufficient to purchase a suitable home without having to wait for her step father to die? Just because this was her family home it does not mean it is going to be the right home for you, practicality should come before sentimentality here.