Any advice on

[Richdp]



.Good day to everyone

I was just wondering anyone had any experiences with inheritance and what it does to 'means tested' benefits?

a friend of mine from a local headway group is due to inherit a small amount from his mum and he's worried this will be over the limit of funds he's allowed before his means-tested benefits are cut.

As he is unable to work he relies on his benefits and would end up losing his housing benefit, council tax benefit and ESA benefit.

Therefore he'd have to spend the small inheritance for living and it will not last him any time. He'd have to go through the whole benefit rigmarole again, which I'm sure many of you know, is a demanding task to say the least 🤯🥴

Maybe there's somebody out there who has some advice I can pass on to him, as he doesn't really have anybody to help.

Thanks

Richard

[sealiphone]

Before I stopped working I was a specialist in Welfare Benefit regulation so all I'll say is:

This particular issue has some of the most complicated matters that may arise, especially about spending your capital.

The law is so complex, I would see decisions on a monthly basis which had the potential to be put before the Judge, depending on all the circs of the claimant.

So your friend needs specialist advice before he is due to receive this money and I understand Headway can provide it but I don't know how I would rate them, another option is CAB and any specialist advice centre, which is always dependent on decreasing funding.

It may be the amount wouldn't be so high it would stop other benefits but that is a very basic calculation and often on a LAs website or elsewhere on the web.

I certainly wouldn't commit to more than that, good luck to your friend, perhaps the local Headway group may have benefit advice, often by a local specialist doing it on a voluntary basis or links to good benefit advice.

[Butterfly28]

This is potentially complicated and it’s important for your friend to get advice before the money is paid to him. I would start with your local citizens advice bureau . Good luck

[Pairofboots]

Hi Rich, I would agree with getting some specialist advice. I might have this wrong, but I get a miniscule amount of ESA due to income from pension. I have fallen foul a few times by not informing the DWP when my pension increases, despite telling them I cannot understand. I have said to them they can keep the money because it really isn't worth the hassle (and the cost in fines). They insist I must receive the small amount if I claim ESA. I will eventually receive too much pension, therefore will receive no cash amount, but I will still be entitled to a claim ESA. This is because I am under the state pension age and ESA pays your N.I. contribution that makes up your state pension. I don't know about housing benefit. Hope this makes sense 🍀

[pinkvision]

Hi get advice on setting up a trust fund, it costs about £800-£1000. The limitations with the DWP are that you can't have more than £6000 in your current and savings accounts at any one time, this affects DWP awards. The trust fund can be used to pay for services and costs outside of what is considered day to day living. See a specialist trust fund solicitor to see if inheritance is covered under the various schemes available under the law.

[Painting-girl in reply to pinkvision]

I haven't checked this, but the income from the trust may still count as income.

[pinkvision in reply to Painting-girl]

I've got a trust for my accident payout, a solicitor sets up the fund and informs the DWP, the DWP verify it and say it's not counted as income in a letter. An inheritance trust may have different rules, a solicitor in the field will know the rules and set it up appropriately. The emphasis is on 'not' having £6k or more in your current and savings accounts. You can pay for a variety of things directly from the trust fund and it does not affect DWP payments.

[Painting-girl in reply to pinkvision]

That's useful Pinvision. Insurance payouts aren't taxed as income - but that's not the same as your entitlement to benefits. Are you the donor and the only beneficiary of the trust, or is it a discretionary trust? What I'm getting at, is if it's a discretionary trust there are taxation points every 10 years. Trustees are also subject to different tax rules to individuals. (Rich, it'd be a good idea to find a financial advisor who is also a STEP member of if you're interested in trusts)

From distant memory - again I haven't checked today, I think some state benefits don't count money in a pension fund either - which depending on your age, could be quite a flexible option.

[Painting-girl]

Hi Rich - here's a random selection of thoughts.....

Finding a good financial adviser is an option, look for someone chartered - all the exams require them to have some knowledge of the benefits system - many will give their initial advice without a fee, but will charge a percentage of any investment solution. But ask a lot of questions, make sure you understand whatever they suggest, and get them to prove it won't affect benefits. It can be worth talking to more than one.

It is worth having even a microscopic level of income from benefits, as it opens up a range of further benefits.

capuk.org ( Christians against poverty) offer effective practical free help and advice.

There is an issue with a planning any 'getaround' like a trust, that this can be deemed to be depriving yourself of the money intentionally - HMRC can just 'look through' such actions, and so can other public bodies.

I can see the problem, and how helpful it would be to have a nest egg - but benefits, however low, aren't meant to be paid to people that have their own resources - I had savings before the TBI and so I have to live on them, and wait for them to run out.

How old is he? Does he have children or a sibling? A will can be adjusted after a death - perhaps in favour of a child for example.

[Richdp]

Thanks for all your suggestions and advice. As it happens I don't think his mum is sound of mind enough to change her will. It's just him alone and he's quite a quiet character. Thanks all