inheritance

[wanton]

This is an excellent site full of knowledgeable people given what I now know about PIP following my first thread.

 

 

Now my second and just as important. I'm not trying to get something for nothing, I just want to follow the rules and claim what the law allows me to benefit from.

 

 

As I said before, I was 65 in June 2014, my wife is 71.

We receive a mixture of income, AA (wife) DLA (me) private pensions (me) and each of us receives the SRP + we get a top up of Guaranteed Pension Credit of £69 a week and get help towards our mortgage (£101,000) with housing/interest payments of £70 a week.

 

 

As I have said, the only means tested benefit is Guaranteed Pension Credit of £139 a week.

 

 

The Guaranteed Pension credit was last reviewed following my 65th birthday in June 2014 and they have not set an Assessed Income Period owing to the fact that I told them that I may well get an inheritance within the next year.

 

 

Well the inheritance has been confirmed by the Executor/solicitor and I am to receive approx. £140,000.

 

 

We have an interest only mortgage and have to make a monthly top up over and above what the Pension people pay of £96 a month. The fixed rate deal finishes in 2017 then it goes onto the normal higher rate. The mortgage is due for repayment in 2020.

 

 

Without going into any great depth, We have not been able to save any money to repay this mortgage (ill health retirement, loss of money in an investment) Our intention was to sell in 2017 when the payments will go up which we will not be able to afford, The equity will be no more that £8000 after paying the mortgage off and paying all of the legal fees etc.

 

 

However, given that I am to get this inheritance, it will enable us to stay where we are and not have to rent. The only problem is that we need a ground floor bedroom due to my wife's disabilities. We have always had the intention to build a single storey extension to provide a double bedroom and a walk in shower room but it was a dream with not having any money.

 

 

To settle the mortgage we will have to pay £101,000 + 6% (early settlement charge) + legal fees which come to about £108,000.

 

 

The extension that we need that will make life so much easier will cost about £14,000.

 

 

Our car needs to be replaced as it is on its last legs so looking round for a similar model but much younger - 12 months old we would need about £18,000.

 

 

As we will need to keep our Pension Credit to continue to live off, does anybody see a problem in what we are thinking of doing? Does anybody have any alternative ideas?

[id6052]

i cant see any difficulty in paying off mortgage and building extension - however £18k on car might raise questions

[wanton]

i cant see any difficulty in paying off mortgage and building extension - however £18k on car might raise questions

 

Many thanks.

 

 

I don't suppose that you have any links that refer to the law or guidance if we were to pay off the mortgage early and build the extension? As I understand it, you aren't allowed to settle ANY debt if it is not due for settlement, you have to keep on paying the monthly amounts, but then it is very confusing.

 

 

As for the car, we could get a Motability one up to a value of about £25,000!! But as we want to own the vehicle simply because I doubt very much that I will get the relevant award under PIP when it is my turn to be 'invited', no doubt when I am in late 60's/early 70's!!!!!

We need a specific type of vehicle for now and for the future (neither of us are going to improve in our health. It has to be high off the road so getting into and out off is easy, it has to be able to cope with the harsh winters we get round these parts (4x4 type of vehicle). Having the likes of an Astra would be of no use to us -both to get in and out of it & too low down to cope with mud/snow and water on the roads. £18,000 is cheap for a vehicle of this type. To get what we would like we would have to spend in excess of £25,000 for a recent decent second hand one.

[id6052]

You will want to look at Regulation 21(2)(b) of the State Pension Credit Regulations 2002

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Notional capital

 

21. (1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to state pension credit or increasing the amount of that benefit

 

(2) Without prejudice to the generality of paragraph (1) a person who disposes of a capital resource shall be regarded as—

(a)depriving himself of it if the disposal was by way of gift to a third party;

(b)not depriving himself of it if the disposal was for the purpose of—

(i)reducing or paying a debt owed by the claimant; or

(ii)purchasing goods or services if the expenditure was reasonable in the circumstances of the claimant’s case.

 

http://www.legislation.gov.uk/uksi/2002/1792/regulation/21/made

[wanton]

You will want to look at Regulation 21(2)(b) of the State Pension Credit Regulations 2002

 

 

Notional capital

 

21. (1) A claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to state pension credit or increasing the amount of that benefit

 

(2) Without prejudice to the generality of paragraph (1) a person who disposes of a capital resource shall be regarded as—

(a)depriving himself of it if the disposal was by way of gift to a third party;

(b)not depriving himself of it if the disposal was for the purpose of—

(i)reducing or paying a debt owed by the claimant; or

(ii)purchasing goods or services if the expenditure was reasonable in the circumstances of the claimant’s case.

 

http://www.legislation.gov.uk/uksi/2002/1792/regulation/21/made

 

 

 

 

Thank you. I am so glad that I have found this web site. That link to the law is quite informative.

I have been worrying about this as I have been told that you cannot pay off any debt or mortgage early. So it seems that we can settle our mortgage in full, build the extension that we need and get a car that is both reasonable in cost (given the type it is) that is vital for our needs.

All in all that covers the whole £140,000 AND it will not affect what we get from Pension Credits albeit that the DWP will save on the housing/mortgage costs of over £3600 a year.

Great.

[Mr.P]

[...] we need a ground floor bedroom due to my wife's disabilities. We have always had the intention to build a single storey extension to provide a double bedroom and a walk in shower room

 

In case you are not aware of it - You may well find you can claim VAT exemption for any building works that are for the benefit of a disabled occupant. For some adaptations, grants are also available, but these usually have qualifying conditions attached (usually a savings ceiling).

 

As an example, once my mother was registered blind, we could get a new bathroom built and not pay any VAT. Financial assistance was also available in the form of grants as long as her savings were below £23,000 and she remained in the property for a minimum of (I think) five years.

[wanton]

In case you are not aware of it - You may well find you can claim VAT exemption for any building works that are for the benefit of a disabled occupant. For some adaptations, grants are also available, but these usually have qualifying conditions attached (usually a savings ceiling).

 

As an example, once my mother was registered blind, we could get a new bathroom built and not pay any VAT. Financial assistance was also available in the form of grants as long as her savings were below £23,000 and she remained in the property for a minimum of (I think) five years.

 

Wow, I never knew that!!!

 

 

I presume that the info about the VAT will be on the HMRC website. I'll have a look at it later. Thanks for the info - it could well mean a saving of £2800 which we could use for a well deserved holiday!

 

 

As for the grants, are you talking about grants from the council? If so do you know what they are called?

I'll also have a look at their website as well, both the local council and the county.

 

 

You have been a great help.

[Mr.P]

Some info about VAT from HMRC: http://www.hmrc.gov.uk/vat/sectors/builders/disabled.htm (side note: You may also qualify for VAT relief when it comes to purchasing a car).

 

As for grants, you'd need to talk to the Adult Social Services department at the county council. Failing that, check to see if you have a local Age Uk office and have a chat with them. There is quite a bit of help and support out there, but it isn't always easy to find or access until you know who to ask. The level of support also depends on the disability and savings/income.

 

I only scratched the surface when I had to look into this.

[caro]

Age UK are very good on benefits advice too, and if memory serves me right, they may even visit you at home to do an assessment. They can help with all sorts of things so please do contact them.

[honeybee13]

Seconded about AgeUK, they were very helpful to my elderly mother.

 

HB

[dyfed]

Just ask George Osborne how to avoid paying inheritance tax like he did

[wanton]

Just ask George Osborne how to avoid paying inheritance tax like he did

Thank you. I have already considered what may happen when and if we need to have care in our older years as well as the problems that could arise with IHT when we leave this world. Our home will be placed in a Vulnerable Persons Discretionary Trust as soon as it is paid off.

[GrahamMcLean]

I'd make an appointment with citizens advice. I was of the understanding that inherited income would be taken into account for means tested benefits. As silly as it sounds, DWP may expect you to use the 140k to live off.

[wanton]

I'd make an appointment with citizens advice. I was of the understanding that inherited income would be taken into account for means tested benefits. As silly as it sounds, DWP may expect you to use the 140k to live off.

 

Thanks, that was my initial thought from the start.

However, the kind people on here have given me the link to the relevant legislation and after reading that, then the Decision Makers guide along with the stated case law, it does in fact appear that under the circumstances the DWP will not treat it as deprivation. However you do make a good point and considering the other advice I have had on here, I will be popping along to AgeUK and asking what they think.

 

 

To be honest the fact that it may be the case that there is deprivation, I cannot understand the logic of the DWP in stopping our income and making us live off the inheritance when we would have paid off the mortgage with it even if we weren't on benefits. How would the DWP expect us to live off it and guarantee a roof over our heads - oh yes, sell and rent of course. We will have to see what AgeUK have to say.

[wanton]

UPDATE

 

This is most confusing. We had a meeting yesterday with AgeUK and they can only refer back to the legislation and the DWP handbook. They agree with what has been said on here in that paying off a mortgage early out of the inheritance funds whilst in receipt of Guaranteed Pension Credit will NOT be treated as deprivation of capital. However they went one step further and considered the same scenario as if we were claiming another means tested benefit (JSA/ESA/IS) as well as Housing Benefit. Under those benefits the legislation and certainly the DWP handbook states clearly that if paying off a mortgage early it WILL be treated as deprivation.

 

 

Since coming home, I have researched this and can agree that the situation with Pension Credit seems to be a lot 'softer' than if you were claiming any other means tested benefit. Am I right? Can there be two totally different decisions depending on which means tested benefit you are claiming?

 

 

Personally I am a little worried that I am missing something here and that what is said in the DWP Pension credit handbook is wrong and that Deprivation of capital in respect of ANY means tested benefit should follow the SAME rules.

 

 

Does anybody have any idea please?

[id6052]

the rules for working age benefits are different from those for pension age benefits

[wanton]

That does appear to be the case, but to be honest I wouldn't trust the DWP to think the same way!! They do have a habit of not following what is in front of them in their handbook or the legislation. They seem to look for the best option for the government whether it is right or wrong.

 

I still can't see why Pension Credit rules should be any different from the rules relating to the other benefits - deprivation is deprivation which ever way you look at it. Put simply, I am trying to put the money into our home which is obviously an exempt asset thereby protecting our entitlement to Pension Credit. The knock on effect will also increase our net spendable income as we would no longer have to pay the mortgage top up every month - but yes I know I can't very well tell the DWP what I would like the end result to be!!

 

To protect ourselves against any eventuality and taking the worst case scenario, I think that we have two options.

The first is to use the inheritance as we intended and close down the Pension Credit claim. They can't very well ask questions or get involved with the matter if there is no valid claim in place. We could just about manage to live on what else we have coming in.

Or, close the Pension Credit claim and use the inheritance money to keep us going for as long as it is possible and not worry about paying the mortgage off.

 

I just don't feel comfortable in having a long drawn out argument with the Pension Service over the question of whether paying the mortgage off and the other things would or would not be deprivation when looking at the different rules of it for ESA/JSA/IS and PC

[antone]

Option one makes no sense. Why not keep the PC claim, pay off the mortgage and see what they say? If they don't argue deprivation, fine - no mortgage and you keep your PC. If they do claim it's deprivation and you really don't want to argue the toss, even knowing that they're wrong according to their own rules, then just accept their decision. What do you gain by preemptively closing the claim?

[fletch70]

Rather than closing down the claim why not pay off the mortgage and get the car then let them sort it out. In my experience it was not the DWP that were so bad but the local council. Of course that is just my experience so may be very different.

I do wonder on how they will feel about 18K on a car

[wanton]

Option one makes no sense. Why not keep the PC claim, pay off the mortgage and see what they say? If they don't argue deprivation, fine - no mortgage and you keep your PC. If they do claim it's deprivation and you really don't want to argue the toss, even knowing that they're wrong according to their own rules, then just accept their decision. What do you gain by preemptively closing the claim?

 

I presume that you are suggesting that in addition to paying off the mortgage and buying what we intended, we should then inform the Pension Service of what we have done? Alternatively should we do the above but NOT tell the Pension Service and wait until they find out and come back with a demand for a large overpayment of benefit?

If the former, would it not be better to put the money in our savings account and ask the Pension Service if what we propose doing to try to keep our benefit would not be deprivation?

If they say it would be, then we would be back with both of my options.

[wanton]

Rather than closing down the claim why not pay off the mortgage and get the car then let them sort it out. In my experience it was not the DWP that were so bad but the local council. Of course that is just my experience so may be very different.

I do wonder on how they will feel about 18K on a car

 

Try finding a car that fits the criteria that we have. Diesel, at least 2 litres for our caravan, 4x4 due to where we live, height in getting in and out, good residuals, good reputation for reliability, cheap to service and maintain and cheap insurance (less than £200 fully comp).

What we would like is over £36000 new!!!

Even Motability cars are up to £25,000.

 

 

Yes I agree with your comment about the council, hence if we can pay off the mortgage, the property will be going into a Vulnerable Persons Discretionary trust. The council would then have one heck of a job trying to get at it if and when we may need help with caring in the future - as do most of our politicians!!

 

 

The idea in closing it down would shut down the argument. Leaving it running would lead to a protracted argument that I know that I don't have the ability or capability to go to court with.

[colin11]

Could you not just cancel your claim when you get the money, then pay the mortgage off, extend the house, buy the car, then when you are down to an acceptable savings limit, reclaim ?

[wanton]

Could you not just cancel your claim when you get the money, then pay the mortgage off, extend the house, buy the car, then when you are down to an acceptable savings limit, reclaim ?

 

I agree entirely, and that is what I am seriously thinking of doing.

The only trouble is that when I do have to re-claim, they would be asking questions of where the money had gone as to them I would have got rid of it as quickly as I could so that a new claim could be put in.

They could very well determine that there would be a considerable amount of notional capital still existing which would stop my new claim before it got started. It will take no more than a few months to get rid of the entire £140,000!!

 

 

I have to laugh though, before I became entitled to this money we were more than happy with our little lot. The money hasn't brought us anything but aggravation except the opportunity to pay off our mortgage.

[antone]

I presume that you are suggesting that in addition to paying off the mortgage and buying what we intended, we should then inform the Pension Service of what we have done? Alternatively should we do the above but NOT tell the Pension Service and wait until they find out and come back with a demand for a large overpayment of benefit?

If the former, would it not be better to put the money in our savings account and ask the Pension Service if what we propose doing to try to keep our benefit would not be deprivation?

If they say it would be, then we would be back with both of my options.

 

Yes, I'm suggesting that you tell them. It doesn't really matter whether you do it as a fait accompli or whether you stick the money in a safe account and talk to them first since according to the regs posted above and the DWP guidance handbook it's not deprivation but, if you're really worried, speak to them first.

 

I don't see why preemptively closing your claim makes any sense.

[wanton]

Yes, I'm suggesting that you tell them. It doesn't really matter whether you do it as a fait accompli or whether you stick the money in a safe account and talk to them first since according to the regs posted above and the DWP guidance handbook it's not deprivation but, if you're really worried, speak to them first.

 

I don't see why preemptively closing your claim makes any sense.

 

Thanks

For the sake of clarity I will telephone them in the morning and see what they say, reporting back here for further advice or comments.