Inheritance for vulnerable family member affecting benefits

[LightandAiry]

Any advice welcome - my db is very vulnerable and lives on benefits. We are set to inherit I estimate around £140,000 each when our surviving parent passes away. I am pretty sure my db would get through this in months, and would lose all entitlement to means tested benefits for a number of years.

Does anyone know in these cases if benefits can restart after the money is gone? Also I need some advice about setting up a trust as this could be a way of making sure db's inheritance doesn't affect his benefits.

Thanks, any signposting welcome, I am very worried about them ending up destitute, there is little grasp on financial reality.

Someone with knowledge of benefits or trusts will be along soon but I wondered about whether the inheritance could be used to buy a small flat for him so that at least he always has that security and he might still be ok benefits wise too as he might still be eligible for most (except housing benefit)

Thank you Polly - that could be an option

What benefits is he on currently? PIP, for example is not means tested so this wouldn’t be affected.

Depending on his vulnerability, ask a charity that could support. I have a sister with learning disabilities in the same situation and her money, when the time comes,will be going onto a trust. My parents have been to numerous meetings through mencap about what to do about wills etc.

Buying a flat could then lead to him being able to service charges and building refurbishment costs.
These can be very hard to afford for people on benefits.
We have just had to fork out £17,000 per flat for fire remedial work!

Thanks for replies. Trouble is my DM has dementia and inheritance to be divided equally I'm her will. No mention of a trust.

*Msbevvy" I was also thinking that about a flat - the service charges are a burden.

Thanks neerg definitely need some advice

Ciderjolly not sure what benefits he's on, but the means tested element, housing benefit and UC would cease according to info I've found.

You’d need to check detail on this but I’ve been at a talk by a solicitor to a local asd parents group. There is a special type of trust called a disabled persons trust. Your parents need to leave their inheritance into one of these. I understand it then doesn’t effect benefits but check specifics with a solicitor. I need to sort for my child although he’s only 12 at min

My sister owns a flat and is receipt of PIP & DLA (thinks that's right)

She gets most (if not all) of her service charges back - she submits a form to whoever and they get added to her money she receives.

She does still have the buildings insurance though which I don't think she gets back.

AFAIK money in trust is considered capital by DWP unless it was compensation for a personal injury.

As I understand it this specific type of disabled persons trust is different

Not enough info to be able to accurately answer.

Is your brother classed as disabled or does he have capacity but some kind of addiction issue?

Because if it’s the latter you have zero power really unless you have a good relationship with him and he will take your advice.

Citizens advice is your best bet anyway- as always, with threads about benefits on Mumsnet, you will get lots of incorrect advice and folk guessing at answers which is rarely helpful.

Aah good point I’d assumed he was disabled but he may not be

When we were setting up our wills, DD1's portion of any life insurance she may be paid if we both die would be put in a disabled persons trust.

You need legal and financial advice, and some benefit specific advice too. The first question is how much capacity does your db have to make his own financial decisions? Will he be willing to put the money into trust? If he doesn't have capacity, does someone act for him? This is where the legal advice comes in for you and him.

In terms of the money itself, yes for benefits purposes it will be seen as capital, and so means tested benefits would stop as you know. He needs advice from a benefits advisor on what spending would be considered reasonable in order for him to receive benefits again once the money has been spent for living purposes. For example he might be ok using the bulk of it to buy a home, but giving it all away is likely to be looked on negatively when it comes to reapplying for benefits. Look for charities that specialise in his vulnerabilities and ask them to signpost you to help.

It is reasonable to expect him to live on this inheritance though, but it's not the kind of money where its going to allow him to see out his days without resorting to benefits again. You might be able to find ways to make it go as far as possible, or provide a measure of long term stability though. This is where you need financial advice. A home/trust/investment of some sort which stretches that money as far as possible, and invests into his older age would seem like a good idea (im guessing he doesnt have much of a pension?). But it needs to be done in mind for the future when he most likely will need to access those benefits again.

Good luck, you sound like a very caring sibling.

Ciderjolly he is very intelligent but bad with money, doesn't lack capacity but has issues as you say :(

Unfortunately as you mum has dementia and I assume has lost capacity? She can no longer changer her will. If she still had a capacity then a disabled discretionary trust in the Will would be the way forward. This wouldn’t affect benefits. Assuming the Will cannot be changed due to your mums capacity, there isn’t really much you can do. If you vulnerable sibling has capacity (you mention vulnerable so not sure?) if they have capacity as a beneficiary once your mum dies a deed of variation could be created (varying terms of the Will) however again is your sibling doesn’t have capacity, there really isn’t much that can be done.

katmarie thank you, this is a difficult issue. He is very proud and can be very difficult to deal with. I need to put the facts before him. I am hoping the CAB can talk to me today, so far I've not been able to gain any advice. It feels so difficult to work out.

no it isn't

See a solicitor. The money can go into a Trust so won't affect benefits. You can still access the money in Trust. It's quite straightforward

We have a similar situation. That's so interesting. Our relative works (low paid, part time) and doesn't have any diagnosed issues, as such- no problem with alcohol etc.
The problem is that he's never left home, managed a bank account, paid a bill etc.
He had no savings or pension, but we've been putting money away for him.

We have no idea of his capacity. He's extremely quiet. Almost totally passive. Such a worry.

There is a way of doing it but it may be too late as it needs to be carefully specified in the will. We have exactly this scenario for dsd and dp sort specialist advice to ensure she isn't disadvantaged (her inheritance would be used up in around 2 years but mean she had to move, something detrimental to her, instead the trust can top her up for the rest of her life as she has no capacity to even understand money)

I agree with @123sunshine . If you dm lacks capacity to change her will, your dB can opt for his share to go into a vulnerable persons trust by making a deed of variation to the will within 2 years of your DM's death. But he would need to be willing to do this. It can't be done to him as it were.

picklemewalnuts It's such a worry isn't it? I hope things get sorted for him

Gogohmm that sounds ideal.

"123sunshine & LosingTheWill2022* thank you - I've never heard of a deed of variation, I need to look at that.

I have a telephone appointment with the CAB soon, they will probably just signpost me I hope as katmarie says different advisors are needed, this is daunting but the thread has helped me. Thanks to everyone for replying.

That's really good news! I didn't know an individual could choose that!

Is there some kind of list of qualifying requirements?