He is not entitled to the DLA, that is claimed by the resident parent to pay for the childs needs. It is not a marital asset for him to lay claim to.
You have no responsibility to provide him with a second home in which to live because he doesn't like renting whether you pay for it with inheritance or by any other financial means.
He is EQUALLY financially responsible for those children but is attempting to blackmail you into accepting zero maintenance by threatening to take half the DLA. It's an empty threat based on how few days he has them but he is trying to use it as leverage because he is a selfish tight fisted bastard.
He is a financially abusive and controlling piece of shit and a terrible fucking father, more interested in himself than his child with disabilities.
I can imagine that maybe he was using the threat of separation to try to get you do what he wanted and to keep your mouth shut. You stood up to him by calling his bluff when he did. You need to carry on with what you started there and stay strong against his bullshit.
Get angry and stay angry.
Don't believe a word that comes out of his self serving mouth because he is attempting to manipulate you into letting him walk off with your money and your children's state provided money as his best outcome or free of financial burden as his worst.
For the love of all that is holy, get some good legal advice or at least contact the benefits people.