Income Support and max bank balance

[konark]

Sorry overdone I forgot yours- the money will be counted as capital as soon as it clears in your account I'm afraid.

[antone]

antone-You say that 'lawful doesn't enter into it', but what is lawful or not is the whole point of the argument. I agree the £6,000 threshold is an arbitrary figure, but it is the DWP's arbitrary figure so it has effect in law. 'Contriving ' to keep your capital under £6,000 is not an offence any more than 'contriving 'to keep your speed under 30mph whilst passing a speed camera. The bottom line is that if you are paid in 2 instalments you never go over the threshold so you never lose entitlement to means-tested benefits.

 

No, you missed the point: "lawful" doesn't enter into it because there is no crime involved in spending one's own money. Deprivation of capital is not, in and of itself, an offence, it's merely something that will be taken into account when entitlement to means tested benefits is considered. OP could receive all the money at once, or in eleven separate installments of £1000 or whatever, spend it all on fine wines and luxury holidays, and commit no crime whatsoever provided he or she did not attempt to hide this from the DWP. We do have to be careful about assuming that keeping capital under an arbitrary limit will, under all circumstances, protect a claimant from any suggestion that deprivation has taken place.

 

You do seem to be aware of potential problems with your proposal, since you were careful to select £5,400 as the amount the OP should seek from the estate, presumably in the erroneous belief that there is no requirement to report smaller amounts than this. But even if you're right and I am wrong about that, why did you not select £5,500 as the amount? Well, because you believe OP would be required to report that amount, but why, if what you propose is not a problem, would a requirement to report be a concern?

 

The real stumbling point, of course, is that a claimant can be treated as having notional capital if that capital would be available on application (see DMG29, 29857). The reason I used the word "contrived" is quite simple: a deal reached with an executor of an estate to delay payment of an inheritance for no reason other than to circumvent DWP capital rules is is pretty much the definition of "contrived". This is important: deprivation requires an intent to secure entitlement to means tested benefits, and it's normally fairly easy to argue that yes, you had the money and spent it but no, you did not do so with the intent to secure benefit entitlement. It won't be so easy to make that argument if you've struck a deal with the executor for that specific purpose.

[overdone]

So if she gives me one cheque for 5,500 made out to me and the rest in a cheque for a garage I could buy a car?

[antone]

So if she gives me one cheque for 5,500 made out to me and the rest in a cheque for a garage I could buy a car?

 

If you have a justifiable need for a car (and it doesn't have to be much justification: cars are not luxury items for many people) then you could probably just buy one with cash or a cheque of your own and not have any problems with deprivation. The mere fact that money is issued to you in the form of a cheque to a third party won't put you in the clear, though.

[antone]

Just checking through some more DMGs on this matter, and Konark is right and I was wrong about one point: it is indeed not necessary to report capital changes that do not result in the claimant having capital over £5,500. Fair enough - when someone is right they're right etc, and I concede that point.

 

Still, my basic point stands: deliberately delaying receipt of capital is a bad idea, for the reasons I mentioned above.

[register]

My sister is prepared to retain it in the executors account as she maintains no one can force me to accept my inheritance.

 

if it were me, i would do this. the guvment have bigger fish to fry than you. just plead ignorance and have a happy life.

[konark]

overdone- getting your sister to buy a car for you would probably go 'under the radar' because you'd stay under the threshold, but technically this is still deprivation of capital unless the DWP consider the car to be reasonable spending, which they may do if you ask them, it's been allowed before..

 

antone- You say 'The real stumbling point, of course, is that a claimant can be treated as having notional capital if that capital would be available on application (see DMG29, 29857)'. A beneficiary of a will cannot take capital 'on application', certainly not during the 'executor's year'; they get their bequest when the executor chooses to give it them and not before. It would be very difficult to prove that any deal had been struck with the executor..When solicitors act as executors they often release an interim payment as assets are sold whilst hanging on to some money in case of surprise creditors or long-lost relatives turning up so staged payments are quite common..

[overdone]

So I ask them first about the car.

[martin2006]

Not an inheritance but a similar situation and here's hiw it actually panned out for me.

As part of divorce settlement i had the house and the kids and did not have to sell till the youngest left school at 16.

Put house on market and it sold, the property made around £30k and this was split between myself and ex after expenses.

At this point i of course had to move with the kids and into private rented i went at £550 per month. As the divorce left me in a financial mess i had to pay 6 months upfront, plus deposit so £4300.

My belongings went into storage for a couple of weeks at a tune of £350 plus removal van and then van again 2 weeks later so £700 altogether

I bought new furniture for new house throughout, sofas, beds etc, 2k worth i think and i replaced my car @ £3,600. All in all i soent around £11k and then git a letter from income support which i receive as i am carer to my disabled son, asking about the capital, i told them everything i had done with it and how much i had left. Because i was up front and honest with them from the start i had no problems at all and they accepted my explanations as i had receipts and/or bank statements.

The point is this and in answer to your original post, you can soend it on whatever you like but be careful because IS will ask. If you need to repkace things such as your car or old worn out furniture, thats fine, i pretty much re furnished a full house, i just didnt go overboard with flashing the cash

[martin2006]

If you need a car, theres nothing stopping you taking the full inheritance and buying one, £6k isnt unreasonable for a decent reliable car these days.

I will stand corrected if anyone knows if there is a limit under IS rules of deprivation of capital

[antone]

 

antone- You say 'The real stumbling point, of course, is that a claimant can be treated as having notional capital if that capital would be available on application (see DMG29, 29857)'. A beneficiary of a will cannot take capital 'on application', certainly not during the 'executor's year'; they get their bequest when the executor chooses to give it them and not before. It would be very difficult to prove that any deal had been struck with the executor..When solicitors act as executors they often release an interim payment as assets are sold whilst hanging on to some money in case of surprise creditors or long-lost relatives turning up so staged payments are quite common..

 

The key points are: capital cannot be counted as belonging to the claimant until that person becomes the beneficial owner of the capital. However, if the claimant intentionally defers receipt of capital in order to secure entitlement to means tested benefits, then it is likely to be treated as notional capital. I accept that there are cases where an executor may, for perfectly valid reasons, be unable to release all or part of the money for some time. But that's not what we're talking about here: the suggestion was to work something out with the executor to release the capital in smaller sums specifically in order to conceal the existence of said capital from the DWP. What you're saying now is that this would be a relatively easy scheme to get away with, and that may well be true. But it is, quite clearly, deprivation.

 

It's academic now from the OP's point of view, but the best way to deal with these sorts of situations is to use various types of trust. It is possible, with planning, to preserve means tested benefit entitlement while still using the money for the benefit of the claimant.

[overdone]

"It's academic now from the OP's point of view, but the best way to deal with these sorts of situations is to use various types of trust. It is possible, with planning, to preserve means tested benefit entitlement while still using the money for the benefit of the claimant."

 

I do know of someone with money in a trust fund of sorts, what it is I don't know, but they still get means tested benefits like income support. They can access it too but would then have to declare it to Dhss. And lose money. This is all legal. Any idea what trust this might be as a friend of mine had a solicitor who was sorting the same deal out for him. Lost touch with both friends so dont know where to start.

[antone]

"It's academic now from the OP's point of view, but the best way to deal with these sorts of situations is to use various types of trust. It is possible, with planning, to preserve means tested benefit entitlement while still using the money for the benefit of the claimant."

 

I do know of someone with money in a trust fund of sorts, what it is I don't know, but they still get means tested benefits like income support. They can access it too but would then have to declare it to Dhss. And lose money. This is all legal. Any idea what trust this might be as a friend of mine had a solicitor who was sorting the same deal out for him. Lost touch with both friends so dont know where to start.

 

I'm afraid I don't know the details of how to do it - a solicitor would indeed be the best way forward to explain these possibilities, as it's a more specialised area than we on this forum can really deal with. It would need proper professional legal advice. The idea hadn't even really occurred to me until an old school friend, who is now a solicitor herself, set up a business in Scotland offering those sorts of services. (I mention that only in passing: I'm not her advertising agency and in any case she's on a maternity break )

 

But it can be done in some circumstances.

[AndyOrch]

You may find some guidance here in the following links

 

 

http://www.legislation.gov.uk/uksi/1987/1967/made

 

 

Notional income

 

42.—(1) A claimant shall be treated as possessing income of which he has deprived himself for the purpose of securing entitlement to income support or increasing the amount of that benefit.

 

(2) Except in the case of—

 

(a)a discretionary trust;

(b)a trust derived from a payment made in consequence of a personal injury;

©unemployment benefit under the Social Security Act which may be payable to a claimant who is not required to be available for employment; or

(d)an increase of child benefit payable to a claimant under regulation 2(2) of the Child Benefit and Social Security (Fixing and Adjustment of Rates) Regulations 1976(76) (rates of child benefit),

 

 

 

http://www.lawgazette.co.uk/news/avoiding-the-benefits-trap-the-award-of-settlement-money-in-personal-injury-cases-may-mean-loss-of-your-clients-entitlement-to-benefits/19830.fullarticle

 

Regards

 

Andy