Inheritance and Benefits
The client, located in England, is expecting an inheritance from a relative's estate, estimated to be between £10,000 and £20,000. They are currently receiving various social benefits. The client is concerned about how receiving the inheritance might affect these benefits and is exploring options to receive the funds without experiencing capital deprivation or losing their benefits. They are considering whether the money can be placed in a specific type of account to manage this issue. Further details are needed to provide specific guidance.
Questions about this case
These answers have been verified by a lawyer in the LEAP networkIs there any way that the money can go into a type of account where I can keep my benefits and spend the money without it being considered capital deprivation?
To maintain your benefits while accessing your inheritance, consider placing the funds in a discretionary trust. This type of trust allows the trustees to have control over the distribution of funds, thus potentially ensuring your inheritance is not considered part of your accessible assets. It's crucial to seek legal advice to establish the trust properly, as incorrect handling could impact your benefits. Please note this strategy might not safeguard your eligibility for all benefits, and each case is unique.
How does receiving an inheritance affect my eligibility for Universal Credit and other social benefits?
Receiving an inheritance can affect your eligibility for means-tested benefits like Universal Credit but not for non-means-tested benefits. Universal Credit considers both savings and capital; capital over a certain amount begins to reduce your entitlement. Child maintenance and child benefit are not means-tested, so they won't be affected. You should notify the relevant authorities about the inheritance.
What are the rules regarding capital and means-tested benefits in the context of inheritance?
When inheriting money, the rules for means-tested benefits consider the inherited amount as capital. If your capital exceeds a specified limit, you won't qualify for these benefits. If it's over a lower threshold, your benefits may be reduced. Non-means-tested benefits are not affected by your inheritance.
Are there any specific types of trusts or accounts in which I could place my inheritance to protect my benefit entitlements?
You might consider setting up a discretionary trust to protect your benefit entitlements. Such a trust can potentially shield your inheritance from being counted towards means-tested benefits, as the trustees have control over the funds. It's crucial to seek advice from a solicitor experienced in trust law to ensure compliance and proper setup.
What steps should I take immediately after receiving the inheritance to ensure compliance with benefit regulations?
To ensure compliance with benefit regulations after receiving your inheritance, notify the relevant authorities about the change in your financial situation as soon as possible. Failing to disclose can lead to overpayments, which you'll be required to repay. Assess how your benefits may be affected by your capital increase.
How to keep the inheritance and retain benefits?
To keep your inheritance while retaining benefits like Universal Credit, consider placing the funds in a discretionary trust. This structure allows trustees to manage the money without it directly affecting your benefit status. Alternatively, use the inheritance for necessary expenses to avoid capital deprivation.
