Inheritance issues

[Dilraj68]

Please can I get your advice re inheriting a house?

My elderly mum is leaving everything to me. I have two brothers and they're comfortable with two houses each and on a good salary. They've also agreed that I'd inherit everything and that they won't later on dispute this. This will be put into writing.

What will be my situation on inheriting this property? As I'm receiving housing benefit, I will have to declare that but what else will affect me? Will I also have to declare the money I inherit and will that affect my benefit situation? I'm more than happy to do the right thing and obviously don't want to defraud the HMRC so looking for advice here.

Will include more details here if asked. Thank you.

Will you live in the house?
Or sell it and buy a new house?

Obviously your circumstances will change, and yes, if you sell the house and keep the money as savings, it will be looked on as your savings.

If you live in the house or buy a new house - it will affect your housing benefit.

Not sure though, what the situation is if you sell your Mum's house, have loads of cash / savings as a result, and then spend it on a house.

Is this something that you think will be happening soon? (in which case I am sorry to hear that). You might need to allow or the possibility that if your Mum needs to go into a care home her house will be used to fund that.

If you inherit a house you will no longer be eligible for housing benefit (obviously, since you will have no housing costs to pay.) You don’t need to declare that you now own a house per se, but you state that it means you no longer have any housing costs so that these can be removed from your benefit claim.

If you also receive money from the estate then you will need to declare this. If it’s less than £6,000 it currently wouldn’t affect your benefit claim. Over £6,000 and up to £16,000 and your benefits would be proportionately reduced. Over £16,000 and you become ineligible for any benefits until you have less than £16,000. You can’t go on wild spending sprees to get yourself down below the savings limit so that you can claim benefits again, this would be classed as deprivation of capital.

If you sell the house you inherit then you can currently keep the proceeds for up to six months without it affecting your benefits, providing you demonstrate your intention is to use the proceeds to buy another house to live in.

Of course, this is only how things are currently. It could easily change in the future so if you’re still claiming benefits when the time comes you just declare your full financial situation to all parties and they’ll advise accordingly.

There may be inheritance tax to pay, depending on the value of the estate.

Thank you very much!