AIBU to worry I will never be able to use inheritance money?

[WanderingStar26]

An inheritance one, kind of.

I am a single parent, I have a disability which limits how much I can work, I live in a HA house, my youngest child is 16 and going to college in September.

I’ve been aware of the fact that I have had the buffer of UC for years, as well as working PT, but that will be coming to an end (or at least massively reducing) when my youngest finishes education. I have been really trying to up my earnings (I’m self employed), and I’m doing better than I was but it’s difficult health-wise, and I’m definitely not going to be able to get a mortgage anytime soon.

Today my DF announced that he was selling one of his properties and splitting the money between his 4 DC. My three siblings all own their own properties, so that’s really handy for them as they can pay off a chunk of their mortgages. The stipulation to this money is that it can ONLY be used for property, so if I can’t buy then I won’t get it, basically.

It’s very generous of him but realistically I’m not sure how I will ever be able to make use of the money? I repeat, he will not let me have it unless it’s going towards a property purchase. Which is fair enough I guess as he doesn’t want to see it wasted. But I don’t see a realistic chance of me buying a property, ever, sadly, much as I’d love to.

He said he will put my share in an account and when I need it I can have it. But I’m mid forties now, my health seems to be going downhill and despite me really doing my best, my income isn’t ever going to be at a point where I can get a mortgage.

I’m not sure what to suggest? Maybe ask him to put it in a trust so it might benefit my DCs in future? I’m just worried that if it sits in a random account then eventually I might have problems retrieving it from the wicked stepmother (a whole other thread), and best case scenario will end up losing a chunk of it to inheritance tax. My DF is 73.

Could you ask if he can put it in your pension instead. It's a responsible decision, not frittering money away so he's maybe more open to it than just giving you a lump sum of money.

It’s a difficult one. I can see why your father doesn’t just want to hand you the money at the moment. He will feel that it’s won’t benefit you at present while you’re on Universal credit. It would mean losing all entitlement to UC until you had used up the gifted money. He might also be worried that you’d “waste” the money quickly and, as there are rules around deprivation of assets, you could potentially end up worse off. No money and no entitlement to benefits for a couple of years.

Oh ffs he needs to bend a little

Yes, he sounds controlling.

Get on YouTube and research index pension funds with low fees. Then present it as a business plan to your dad.

Receiving the money would also stop OP's UC until she had.savings under 16k.Edit: sorry I replied to the wrong post.

The trouble with that is that for Universal Credit purposes the rental flat would be still be considered as an asset / savings and would make her ineligible for benefits. This would only benefit her if the rental income was the same or more than what she currently receives from UC.

If it’s at all possible I’d go for pension. It has the added benefit that it doesn’t put you at risk of other possible upcoming costs that home ownership might.

If it’s possible with your benefit situation I would really work hard on selling that to your dad as a sensible option. Maybe get your siblings on side. Good luck I hope you are able to get this!

If his concern is that the money may be frittered away would he consider putting it into a pension for you instead?

Otherwise a trust for DC with the property (or perhaps also education?) stipulation seems sensible.

I think talk to your dad about a pension, he could drip feed every year into a pension for you , he might like this because of you recouping the tax from the government, so £60000 with tax would become £75000, you can only pay in the quivalent of what you earn each year up to 60,000 so it might take a few years for it all to go in. I asked chat gpt and if you’re 45 and invested 75000 in apension you could be looking at (depending on how well they perform between 144000-and 332000) at 67
Average annual investment return Estimated value at age 67
3% ~£144,000.
5%. £220,000
7%. £332,000

• £144,000 → about £5,800/year
• £220,000 → about £8,800/year
• £332,000 → about £13,300/year

Agree on talking to him about a private pension. This seems to be the safest and most sensible option. Having witnessed the awful depths some people will go to to obtain big sums of money, I too would be worried about potentially never getting the money with a wicked stepmother in the future possibly helping herself to it.

Your DF is being sensible in many ways. He knows that if he gives you the equivalent in cash it’ll take you over the threshold for benefits entitlement and therefore will effectively go straight to the treasury (ie tax payer).

This is the problem if you depend on benefits - you can’t have it both ways. In your DF’s position I would make exactly the same stipulation.

It depends whether the money goes into the claimants’ bank account at any point. If it does then UC would be reduced or stopped if it were completely over the threshold. The claim would be reinstated once the money left the account but OP would be required to provide proof of how it had been spent. A better way, assuming OP gets a mortgage at some point, would be for her DF to pay the money directly to the conveyancing solicitor - that way it doesn’t touch her bank account and UC can’t count it as capital.

One thing to mention about the pension idea is that you can only pay into a pension up to the maximum of your total earnings in a year (and this includes the 25% government uplift, so this means your dad would only be able to pay in 75% of your total annual income annually). It doesn't mean the pension idea wouldn't work, but the money would need to be dripped in over several years.

This. It’s important to remember that any property which is not your main residence would be counted as an asset, even if it’s not rented out, and the value included in the calculation for benefit, which would wipe out any entitlement.

On a month to month basis, yes, but that's a very short term way of looking at it.

@WanderingStar26 if you believe buying a piece of land can help you with your business, you need to tell your dad this. Explain why you can't buy a property but land, being more affordable, will help facilitate your company's growth as a short term investment. However, I'd be asking him why he would be so against a solid common sense solution you're putting on the table. I understand from his point of view it's a lot of money he's giving you and a property investment is more secure. I'm wondering if he's got reason to believe the money won't be frittered away?

She would still lose entitlement to UC the minute the money hit her bank account. The claim would be reinstated once the money had been spent and OP would need to provide proof of purchase when reinstating the claim.

I would ask him to put £9k a year into your child’s ISA and top up your pension to the max allowed each year. Then you’ll get the money eventually.

He sounds like a controlling twat.

Pension is a good shout, if he seriously objects to that he’s even more of a twat

Get him to put it in a trust where it can be used by you or your recents for buying property.

Buy in the South Wales valleys, maybe Neath? Or there are places in Scotland. I agree it doesn’t sound attractive.

Could you buy land and rent it or make it work for you?

This is how we’ve got round it. A ltd company was set up to buy the house as a buy to let and six months later put into a trust. The house was bought on an interest only mortgage. The family member moved in and housing benefit pays the rent/mortgage. Because the house is owned by the Ltd company there is not the block of renting from family and because the house is in trust it doesn’t belong to the tenant even though they or the grandchildren will inherit it.
It was pretty tedious and the trust cost £3,500 to set up. When you have disabled people in the family you want to treat them fairly and not make their lives harder by ripping out all the hard won safety nets only for them to have to reapply for them a couple of years later. This way they are never going to be evicted again and they’ve had their fair share of inheritance before it causes a load of problems.

Sorry, I clearly didn’t read the whole thread!

Would he consider putting it into a pension fund for you? If you are young enough, you won't be able to access it for many years and it will help give you financial stability as you get older. Pension funds are not usually considered savings for the purposes of UC.

Why don't you buy a cheap property up north in Middlesbrough/Durham way and rent it out. Try to time it as your youngest turns 18 and your universal credit would be reducing and that way you can increase your income.
£60/70,000 would be able to buy you something outright and mortgage free in those areas.