To be worried about receiving inheritance

[OpheliaBoots]

I'll start off by saying that I know I am fortunate and that this is very much a first world problem...

I'm a single parent. I work full time but receive some UC which helps a lot. Minimal child maintenance from DC's father.

A family member died last year and I am due to inherit a part of the estate, although maybe not for a while as the house isn't on the market yet. I will possibly be looking in the region of about £30k, could be less depending on how much the house sells for.

I currently rent. Obviously my priority will be to try to buy somewhere of my own, but area is pretty expensive. Online calculators say I may get a mortgage of around £100k based on my income, which would give me a pot of around £125k to buy once I factor in fees etc. I could get a small 2 bed flat for this, maybe, but nothing great and in one of the rougher parts of the city. But it would be a start.

My worry is about the UC. Obviously (and rightly) this will stop as soon as I get the money. But if I can't afford to buy my own place straight away, it will leave me in the position of having to dip into the inheritance money to live, making buying my own place harder and harder.

I really want to use this opportunity to improve my life.

What would you do?

[MiddlesexGirl]

The disregarding of capital only usually applies to property where you are making efforts to sell and haven't yet, or similar situations. So if youd actually inherited the property it would fall within this disregard.

H2119 applies to business assets.

The support for mortgages is called SMI. It's only available after 9 months continuous UC payments. It pays the interest only at a rate of 2.something %. It's a loan which falls to be repaid when the house is sold.

Citizens Advice or similar should be able to help you.

[MiddlesexGirl]

UC can help with the rent side of a share ownership property.

[Babyroobs]

soliciters have to inform HMRC regarding inheritance don't they ?

[cabbageking]

You still need to comply with money laundering regulations and declare where the money is coming from before any sale can be finalised.

[Bookoffacts]

You pay 800 a month in rent!
A mortgage on 100k would be a quarter of that. Around 200/300 per month.
Have you looked up the calculations and money supermarket. No need to go with a big bank. If you're working is easy to apply for a mortgage. Warning though - they'll press you to borrow as much as possible.
It's a long phone call but then it's done. About an hour. Can be done on mobile.
Go for it.
Buy the flat.
House prices always go up.

[Babyroobs]

If you buy a house and therefore have mortgage payments you will obviously lose the Uc rent element but if you get a work allowance on your Uc ( you will do if you have kids) then if you have a mortgage rather than pay rent you would get the higher work allowance which means that the first £512 of earnings is completely disregarded before your wages reduce Uc, it's not a bad deal at all and is designed to help those with a mortgage . If you bought a shared ownership property ( which is a much more sensible idea) then you continue to get a Uc rent element but only get the lower work allowance rather than the higher.

[MillicentMartha]

Just to remind people that tax credits only take into account your interest on savings whereas UC isn’t payable if you have more than £16k in savings. Once you are on UC you can’t swap to tax credits.

[CherrySpritz]

@chargeorge

I had the same thing but I wasn't on UC. However the solicitor dealing with the inheritance paid the money direct to my solicitor who was going to do the house transaction so it never went near my account - just a thought
Charlie

But how does that help? It would still be OP’s money whether it goes through her bank account or not. And as for those suggesting she doesn’t declare it, are you mad? She could be in a whole heap of trouble if she takes this advice.

[Babyroobs]

Exactly - it doesn't matter whether it goes in anyone's account - the solicitor will report to HMRC that it has been paid. never worth the risk of not declaring capital and it can actually be used to pay off debts and make reasonable purchases.

[cstaff]

Would it be possible to use the same solicitor as the probate solicitor to do the conveyancing on your house. If so you could get the solicitor to transfer your inheritance from the probate account to your property account and they could hold it and use it on your house purchase. If you can't use the same solicitor you could ask the probate solicitor to transfer the money to your own solicitor and they could hold it until your purchase goes through. That way it never sees your bank account.

[EinsteinaGogo]

Don't forget to factor in the most flats are leasehold and mean to you have to pay an annual service charge and ground rent. This can often total between £1k - £2k a year, so budget extra monthly spend on top of your mortgage.

If you go for a house on shared ownership you shouldn't have that cost.

[Nartl0ngNow]

This may sound naive but I always assumed people on benefits had their utility bills discounted.
If this is the case, you might want to look into how your council tax rate might go up and all other discounts you need to ensure you will still get.

[OpheliaBoots]

Thanks so much for all the advice. I will speak to a mortgage advisor and see what I can borrow. I will also speak to UC when I get the money, maybe there is something they can do.
It's going to be hard but hopefully I can make it work!

[OpheliaBoots]

@Nartl0ngNow

This may sound naive but I always assumed people on benefits had their utility bills discounted.
If this is the case, you might want to look into how your council tax rate might go up and all other discounts you need to ensure you will still get.

No. I get 25% off my council tax as a single person but all single people get that.
No other discounts

[OpheliaBoots]

@Bookoffacts

You pay 800 a month in rent!
A mortgage on 100k would be a quarter of that. Around 200/300 per month.
Have you looked up the calculations and money supermarket. No need to go with a big bank. If you're working is easy to apply for a mortgage. Warning though - they'll press you to borrow as much as possible.
It's a long phone call but then it's done. About an hour. Can be done on mobile.
Go for it.
Buy the flat.
House prices always go up.

Yep!
This is why I know that as long as I can get a mortgage, even without UC payments, I will be able to afford it.

[OpheliaBoots]

@ToelessPobble

Have you thought about shared ownership? You may be able to get a house or flat in a nicer area and possibly uc will help with the rent side of it.

This isn't something I have looked into much as I heard bad things but may be worth considering.

[LakieLady]

@blackwellsj, hmmm, I think it would require a very generous interpretation on the part of a decision-maker for that to apply. The "for the sole purpose of the purchase of a home" doesn't really apply, if the OP wanted to splash her inheritance on designer handbags, there seems to be nothing to stop her (although there are rules that allow the DWP to treat you as f you still have the money if they think you have got rid of it just to maximise benefit entitlement). If the will specified that the money could only be used to buy a home, that would be fine.

I've used it successfully where there has been a divorce settlement but no property sale, but never tried it with an inheritance.

It might be worth considering shared ownership, OP. That way you could still qualify for some UC towards the rent element, but have a lower mortgage payment.

You will have to disclose it OP, I've dealt with cases where the DWP have caught on to people having capital above the threshold. I think these come to light when they report interest payments to HMRC for tax purposes. It's really not worth the hassle. Otoh, if the executor just didn't get round to distributing the cash until you were ready to buy, that might be a different matter.

[PigletJohn]

"How would uc even know that you have received that money"

I don't know the answer to that question, but I know a family, working but low income and in receipt of some benefits, who had them stopped, and when asking why, were told "because you inherited half that house."

Unknown to them, the husbands brother was executor of an estate and had taken possession of a house left to them both, without telling the husband of his legacy.

[raspberryk]

I would also recommend looking into shared ownership, I did it where I bought the 50% with cash so no mortgage and UC covered my rent. You could use your inheritance for some of it, a small mortgage on top and keep a small savings buffer and pay off your debt.
My capital was disregarded for 8 months as it was proceeds of a former home earmarked for the sale of another home. I had to prove I was making an effort to buy a house in that time and not spending the capital on general living.
I'm not sure inheritance can be disregarded but I would get set up ready to purchase so that there's only a very short time where your UC is affected.
And they will know that you have the money so there's no point trying to hide it, even though mine was declared it was investigated again when my address changed and I had to submit solicitor letters and bank statements.

[Zilla1]

OP, I don't the details nor your jurisdiction nor the DWP Regulations but if taking the inheritence into account poses insurmountable problems with UC then you might want to investigate the following.

When you discuss with your solicitor, don't forget to ask about deeds of variation if you live in England or Wales and have a family member whom you trust absolutely to become the beneficiary who could pay the deposit on your behalf to check if this route would not contravene the letter of the DWP Regulations, wouldn't cause mortgage problems and wouldn't cause IHT trouble for the family member.

[NoHardSell]

Have you actually already inherited ie this has gone through probate? You might have to declare it already if so. Otherwise, try to arrange timings so that the money is in and out quickly so you just lose a few months uc, if that.

[MrMagooInTheLoo]

Don't know why people are encouraging OP to lie about the inheritance money. Benefit fraud is illegal. You have to live with the consequences if you claim UC and don't tell them when you receive the inheritance. Would it be worth it? HMRC will be involved if the sale of the house goes over the inheritance limit, can't remember what the amount it.. Go on GOV. UK website make an informed decision.

[NoHardSell]

Deed of variation after death probably comes under deliberate deprivation of assets btw

[LakieLady]

This may sound naive but I always assumed people on benefits had their utility bills discounted

If only! They can apply for help towards them, most utility companies have a "Warm Home Discount" scheme where they give a grant of up to (iirc) £140, but you can only apply at a certain time of year and there's a finite amount in the pot. Water companies offer a bit of help, usually by capping bills.

Council tax support varies tremendously. Even the poorest in some areas have to pay 20% of their c/tax. Where I live, that's £5pw even for a band A property, which is a lot to find if you're on the under-25 rate of UC.

[MuminMama]

Does the person in charge of the estate have to pay it to you straight away?

I am the executor of my father's estate. I'm waiting for the house to sell but there is some cash and it's been sitting about for a year. So (unless I'm doing it all wrong myself) you may be able to ask them to hold it until you're ready.