how does inheritance affect benefits please

[jackieandwayne]

My friend Lee, who I posted about on here a while ago, cannot work as he has severe epilepsy. He had his money stopped and was told to get a job, but won his appeal a while ago. All benefits have just been renewed this year. with no problem whatsoever.

 

He gets ESA and is in the support group.

He gets DLA at high rate.

He has his rent paid by HB and also his Council Tax.

He lives in a one bedroom ground floor council flat in a lovely little block, and has done for 20 years.

The extra money has enabled him to kit it out so his home is safe as it can be for his disabilities.

 

4 years ago his father was involved in a dreadful motorway pile up in which his partner and her grandson were killed.

Dad was severely injured and never recovered, and died earlier this year.

 

He was a simple man, owned nothing, and there was no will.

The insurance company who dealt with his claim paid out last week to the tune of 174K.

Lee´s older sister dealt with it all entirely,

Lee would not have been able to deal with it.

The money has been paid to the sister direct.

Lee now has access to 86K which his sister is happy to transfer to him whenever he wants it.

He´s still reeling from his dad passing and this news coming four days ago has actually depressed him.

(Shock if you like, not knowing what to do and the responsiblity of such a large sum of money).

 

NOw, we have never dealt with anything like this but think we have a plan!

We think Lee should buy his little flat from the council outright.

That ensures a roof over his head in an area he loves, for life, as well as an excellent investment for him.

 

What is concerning me, obviously he has to tell DWP about this

. Clearly his benefits will have to be stopped,

but does he keep his DLA?

 

And if he buys the flat, and spends some money on making it perfect for his illness, would the DWP see this as squandering?

 

A daft question perhaps, but who knows in this day and age.

I realise he will be expected to live off his savings until they reduce to 8K

 

when that happens, do the benefits get reinstated, or does he have to reapply and go through all that rigmarole again?

 

And finally, and if I am asking advice on something illegal, apologies,

I simply do not know, since this money has not been willed to Lee and is in his sisters name and in her possession,

 

what would happen if she just paid for his flat, and then hung on to the rest for whatever comes his way in the future?

Like, if she went on a huge family holiday and paid for lee out of that money, that sort of thing

We just want to make sure that Lee is safe for the rest of his life (he is 40) in the best way we can. He is extremely vulnerable.

 

Thanks for reading and we welcome any advice or pointers as what should be done.

[unclebulgaria67]

My friend Lee, who I posted about on here a while ago, cannot work as he has severe epilepsy. He had his money stopped and was told to get a job, but won his appeal a while ago. All benefits have just been renewed this year. with no problem whatsoever.

 

He gets ESA and is in the support group. He gets DLA at high rate. He has his rent paid by HB and also his Council Tax. He lives in a one bedroom ground floor council flat in a lovely little block, and has done for 20 years. The extra money has enabled him to kit it out so his home is safe as it can be for his disabilities.

 

4 years ago his father was involved in a dreadful motorway pile up in which his partner and her grandson were killed. Dad was severely injured and never recovered, and died earlier this year. He was a simple man, owned nothing, and there was no will. The insurance company who dealt with his claim paid out last week to the tune of 174K. Lee´s older sister dealt with it all entirely, Lee would not have been able to deal with it. The money has been paid to the sister direct. Lee now has access to 86K which his sister is happy to transfer to him whenever he wants it. He´s still reeling from his dad passing and this news coming four days ago has actually depressed him. (Shock if you like, not knowing what to do and the responsiblity of such a large sum of money).

 

NOw, we have never dealt with anything like this but think we have a plan! We think Lee should buy his little flat from the council outright. That ensures a roof over his head in an area he loves, for life, as well as an excellent investment for him.

 

What is concerning me, obviously he has to tell DWP about this. Clearly his benefits will have to be stopped, but does he keep his DLA? And if he buys the flat, and spends some money on making it perfect for his illness, would the DWP see this as squandering? A daft question perhaps, but who knows in this day and age. I realise he will be expected to live off his savings until they reduce to 8K but when that happens, do the benefits get reinstated, or does he have to reapply and go through all that rigmarole again?

 

And finally, and if I am asking advice on something illegal, apologies, I simply do not know, since this money has not been willed to Lee and is in his sisters name and in her possession, what would happen if she just paid for his flat, and then hung on to the rest for whatever comes his way in the future? Like, if she went on a huge family holiday and paid for lee out of that money, that sort of thing We just want to make sure that Lee is safe for the rest of his life (he is 40) in the best way we can. He is extremely vulnerable.

 

Thanks for reading and we welcome any advice or pointers as what should be done.

 

The key question that will be asked is why it was paid to the Sister ? Does not sound technically correct. What if something happened to her ? Think the Insurance company have made an error.

 

If the the money has to be paid to Lee as a lump sum, then of course it has to be notified to all people providing benefits and there would be a re assessment. He would lose ESA, housing benefit, council tax benefit, but not sure about DLA. Will have a look, but others may know the answer.

[unclebulgaria67]

DLA seems to relate to health rather than money. Looking at when you need to notify of changes of circumstances, it does not mention coming into money e,g inheritence, lottery win.

[Nystagmite]

DLA won't be affected.

 

DLA is paid because you have care an d/or mobility needs. Your financial situation doesn't matter.

[antone]

An inheritance would be treated as capital from a benefit point of view. DLA is not affected by capital - he will retain this as long as he meets the underlying conditions of entitlement (basically, as long as his condition meets the requirements for a DLA award) regardless of any money he may have in the bank.

 

So we have to consider ESA, HB and probably Council Tax support. The general rule for capital with regard to these benefits is that the first £6000 is ignored, and capital of £16,000 or more will disqualify the claimant from any entitlement. Since the amount in question is £84,000, on the face of it that would seem to be clear: he would not be entitled to ESA, HB and probably not CTR either.

 

The next question, then, would be "what if he spent the bulk of the money on buying a house?" That's not so easy to answer. To be clear, there would be nothing illegal about him doing this, it's simply a case of whether he would maintain his entitlement to means tested benefits, though obviously HB would cease to be relevant once he owned his house. The important thing to consider here is the idea of "deprivation of capital". The idea here is that in some cases where a claimant has spent a sum of money, the DWP may deem him to have unnecessarily deprived himself of that sum of money, so when they work out his entitlement to benefit (ESA in this case) they would treat him as if he still had the money.

 

It's a complex area, and each case is decided on its merits. Some expenditures will be accepted as reasonable by the DWP - things like essential repairs to a claimant's home, a replacement for a clapped-out old car, payment of overdue debts and so on would normally fall into this category. Expensive luxury cruises or lavish gifts to friends and family probably would not. And of course, in the middle there's a grey area. For this reason, I'd suggest discussing the matter with a solicitor would be a good plan, especially since he'd probably want to involve a solicitor in the house purchase should it go ahead. Any solicitor he speaks to should be experienced in benefit matters.

[Mr.P]

The key question that will be asked is why it was paid to the Sister ? Does not sound technically correct. What if something happened to her ? Think the Insurance company have made an error.

 

If the sister had applied for Letters of Administration (probate), then it would be quite acceptable for the insurance company to make the payment to the sister. The money would normally be deposited in an executor's account prior to the distribution of funds to the beneficiaries. As there is no will, rules of intestacy kick in (and on the assumption that there is no wife, just two children), both would get an equal share of the estate.

 

The following is only a suggestion, and both would need to consult a solicitor familiar with probate, conveyancing and benefits:

 

As a trustee, the sister could, with the consent of the brother, purchase the flat in Lee's name and then transfer the residual funds to him. How this would affect benefits such as ESA and CTR would depend on the residual sum he finally receives. An alternative to passing the residual funds to him is to set up a trust that pays out a regular income, but I suspect the annual return would not be great and the DWP/LA may still view the trust as capital. Expert legal and financial advice is required.

 

At the end of the day, both the DWP and the Local Authority must be informed of the inheritance when he receives it.

[jackieandwayne]

Thank you all so very much. Who would have thought a windfall could cause so much consternation! Mr P, Letter of Admin, yes that is what did happen, and the sister dealt with it all as Lee wouldn´t be able to anything that.

 

We will look for a good solicitor to advise Lee, but we think buying his little flat is a must. So what I´ll have a look for tomorrow is a good all round solicitor to deal with house purchases, and financial advice.

 

But you know, if you can find my old thread on Lee, after all the crap this man has been through with the DWP, and losing his mum, then his dad, its about time something good happened for him! And to be able to give the finger to the DWP, even if only for a few years, well even better!

 

Thanks guys.