Deprivation of capital

[Ringley]

Can anyone recommend a good solicitor to advise on benefits please?

My very ill friend is on UC and about to come into a moderate inheritance. She'd like to discuss her options.

Not sure she needs a solicitor. If inheritance is over 16 thou her claim will close. Over 6 thou will mean deductions. She can spend some but should keep receipts and not splurge to deliberately diminish capital or give away large sums. A reasonable holiday is generally considered fine as are reasonable household expenses, maintenance or paying down provable debt.

I’m not in the uk. She will need a financial advisor experienced in social security. Ask here https://www.mumsnet.com/talk/money-matters or I understand Miney Savings Expert has a good chat forum.

In Australia, some things that would be allowed are investment in updated appliances to more energy efficient things, I think insulation is permitted and adapting the house to accommodate disabilities. https://england.shelter.org.uk/housing_advice/benefits/how_a_change_of_circumstances_affects_universal_credit#:~:text=when%20someone%20dies.-,Inheriting%20money,how%20you%20spend%20inherited%20money.

Can your friend drive, does she have a car? Does she need a small sit down scooters thing to get around and would a car need to be adapting to carry the scooter? These are all things to think about.

No options to discuss

if over £16k she loses all benefits

she will lose % in every pound £6-16k in savings

depends what you call moderate

She doesn’t need legal advice as she doesn’t have any options. Any amount over 16k she will need to declare and her claim will close. She can re claim once she is under 16k. When she does re claim she may need to provide evidence of what she has spent the money on. If there are any large unnecessary purchases it may be referred to a Decision Maker to see if she has deprived herself of capital which is spending money unreasonably in order to get rid of capital to claim benefits again. I would advise she keeps this money in a separate account and keeeps a record and all receipts.

if the amount is between 6-16k she’ll have a small deduction for her savings.

Also to add if the inheritance is going though a solicitor they have an obligation to report to dwp

As others have said, it is straightforward - no need for a solicitor. Here's a link to the gov.uk section that covers this: https://www.gov.uk/guidance/universal-credit-money-savings-and-investments

Being ill doesn't really come in to it. As ppl have said its the amount you inherit that decides it the amounts others have quoted are correct.

Options. Haha. If her inheritance is over £6k she will face deductions and if it’s over £16k the claim will close. She doesn’t have any options. The UC conditions are very clear.

As others have said, she doesn't need a solicitor. She needs to spend the money as quickly as possible in a manner that the UC Decision Maker will think is acceptable.

If you have more than £16,000 in total then you will not be eligible for UC. If you have between £6k and £16k then your UC will be reduced on a sliding scale.

You need to bring the amount you have down below those figures. But you have to do it in a way that is not counted as "deprivation of capital".

If you spend the money "extravagantly or imprudently" then they will count it as though you still have the money. Or, even if you spend it prudently but a significant purpose in spending it was to be able to carry on getting UC then they will consider that you still have the money.

So, you have to spend the money as you might if you weren't on benefits.

If you have any debts or a mortgage then it is perfectly ok to use the money to pay off any or all of your debts, that is fine.

The UC Regulations also say that it will be ok if "they purchase goods and services and that expenditure was reasonable in the circumstances of that person’s case." [UC Regs, Reg 50(2)]

So, for example, if you were to buy a newer, more reliable car, that would likely be fine (unless maybe you're buying a Porsche or something like that) or actually buy a car if you don't currently have one.

In contrast, if you were to buy a second car but you are single and can provide no reason why you might need two cars then they likely wouldn't count that as reasonable.

Likewise, if there were any essential repairs that needed doing on your house then that would be fine as well. Perhaps the roof is leaking or the boiler is broken? Or you need to deal with damp or the house needs rewiring etc.

Or if your home is short of reasonable quality furniture, fittings and equipment, it could also be perfectly reasonable to spend a reasonable amount improving poor living conditions.

But that likely wouldn't include buying the very top-end most expensive things.
Likewise, it may be reasonable to take a reasonable holiday, but probably not an extravagant one.

It is very difficult to give examples of what would be counted as "reasonable" as different UC decision makers may vary and it will depend on your individual circumstances and your previous spending patterns.

You should also keep receipts and a record of how you spend any of your capital (even if you lose entitlement to benefits — but may claim again in the future) as evidence to support your case if you are questioned.

In summary, any large items of expenditure: new furniture, family holiday, repayment of debts etc may be accepted as reasonable expenditure, which you would have made, had you not been receiving benefits.

This is what my conclusions were last year. Someone I'm an occasional carer for was in this position.

I'd be careful with solicitors, as, we found, they tend to go by the law, but not by DWP rules, i.e. it might not technically be illegal to do x y z, but, if you check with the DWP, it would still mean you haven't followed their rules. I think one we saw recommended putting the money into a trust for the beneficiary's child – but, in fact, this would count as deprivation of assets.

As pp says, if the sum is over £16,000, the beneficiary's benefits will cease (which can be serious wrt knock on effects on related care packages and services). You can reapply for benefits once you have under £16,000, and you are certainly allowed to spend sums of money on (reasonable) holidays, household items (my relative replaced his very old cooker and bed), pay off debts, etc.. Citizen's Advice should be able to help.

What happens if you don't declare your £16,000+ inheritance, or lump sum of money you have come into, if you don't inform the DWP. Will they/can they find out?

They can and do ask to see bank statements etc as part of regular reviews.

The new powers being proposed would mean that banks/building societies will have to inform DWP of how much is in claimants' accounts.

You'd be unlikely to get away with it.

What a horrid person you must be @newworki to find her situation laughable.

Being ill makes a difference @MinnieCauldwell as she doesn't have the brain space to try to get her head around what is/isn't deprivation of capital. She needs someone to do the reading for her and help her navigate the DWP.

Someone else wanting to keep an inheritance but still claim benefits.

And DWP does check periodically.

You must declare any inheritance, UC aim to do reviews every 6 months where you need to state bank account amounts and often send statements going back several years. If the amount is above £16k, the UC stops but the claim remains active for 6 months, so if the balance goes below £16k payments will resume again, albeit at a deducted rate.
The only way around this (which is what I suspect you are asking) is for a discretionary trust fund ho be set up. This would not give the OP direct access to the money, it is managed by trustees, so not considered savings for the purposes of UC. It's common for parents with disabled DC to do this for their DC, so that inheritance will not impact their care packages. It can be expensive to set up though and can have tax implications. I'm not sure though if the executor can set this up, it might have to be already in place by the benefactor.

She doesn't need a solicitor. I'm a welfare benefits adviser. The means tested benefits rules are very clear. Over £6k there will be a tariff deduction of £4.35 per £250 in savings over £6k. Over £16k there is no entitlement. Also to be very wary of any deliberate deprivation of capital in order to receive UC- they will flag it immediately. There are some accepted uses of savings including clearing debts but documented proof would be required by UC. Your friend will also need to declare any savings/capital immediately over £6k and will be required to submit paperwork including all bank statements to the job centre in an appointment.

There are options such as doing a Deed of Variation in favour of her children or a sibling for example which would mean she never gets the money as Deed essentially alters the will and the children become the beneficiaries.

It really is their money then though.

Yes they will find out and it is then opening her up to potential action for benefit fraud.

I would suspect that Citizen's Advice have more experience in this area than the average solicitor. I'd start with them.

With all due respect it isn't really a matter of navigating the DWP though I see what you're saying. Its a simple matter of following the rules and when you apply for and receive UC you are made aware of the capital and savings rules. Declaration and transparency are key, if you are doing that there is nothing to worry about. Means tested benefits are exactly that. They are not there to continue giving an income when a claimant comes into money they can use to support themselves. If we did not have these rules the whole system would collapse.

As far as I know, if UC discovered this (and things are scrutinized so much more now) this would definitely be considered purposeful deprivation of assets and fraud.

It’s been a while since I left the DWP, but as far as I can see not too much has changed. The problem with any sort of information from solicitors or DWP staff is that it’s difficult to speculate the outcome of a hypothetical situation.

Whilst your friend has over £16k, she will not be entitled to UC. ( there is nothing to suggest that any part of an inheritance could be disregarded ).

The decision as to whether deliberate deprivation has occurred can only be made after the money has been spent. It sounds like a ‘Catch 22’ situation, and in a way it is, but only because it’s so complex.

There really are few generalisations. If I give the example of buying a car.

a) person with physical health problems, living rurally, no public transport, etc replacing their old, unreliable car with a fairly modest newish car - this would probably be fine.
b) person who is young, fit, living in a town with facilities nearby, buying a new BMW, - probably not OK.

All wills are in the public domain. Of course it can be found and the person would be done for fraud, rightly so.

DWP are not routinely checking wills to see if someone on benefits has inherited.

I know of someone who had their inheritance paid into someone else's bank account. DWP are none the wiser.

She doesn't have to inherit. She could delay being paid the inheritance or do a deed of variation in favour of someone else. If she does allow herself to inherit, yes, her benefits will be reduced.

And in my professional experience its not a road I would go down, either.