Inherited £50k but I'm a siingle mum, carer on benefits

[Misspointypencil]

Hi. My mother passed away recently and I am about to receive a cheque for just under £50k. To my brothers that inheritance can just go in the bank, they have good jobs, are home-owners and aren't struggling financially. However for me it's a different story. I'm a carer as well as being a single mum, have a disabled child and I haven't gone out to work for around nine years because of this. I'm not lazy, or a scrounger, in case anyone suspects this - I worked very hard before my circumstances changed. I work even harder now!

It may seem like a lot of money (well, it IS) but I will have to live off it, so I don't know how long it will last, with two young children. I get DLA for my disabled one, and carers allowance, but I don't know if I will still get that.

Anyone got any advice or ideas? I doubt if I would be able to go out to work full time, there's no-one to look after the kids, we have no relatives nearby or any other safety net!

Consult an independent financial advisor. They won't charge for a meeting, or if they do, find one who doesn't.

Personally, I'd go for the pension option, if you're happy living where you are.

The objective is really to salt this money away so that it doesn't affect your benefits. £50k is not enough to live on the interest and it'll disappear ping if you actually try living on the capital.

If you have any debts like CCs, loans or mortgages pay those off as a starting point because no savings account will match the interest you're paying out.

Then I'd suggest you put your maximum allowance away in a Cash ISA. You could look at a unit trust (stocks and shares) ISA for some of the rest... that something you wouldn't touch for at good 5 years. Pension contributions are also a good idea. And find out what the maximum is you can have saved before it affects benefits and keep a working 'rainy day' amount in as short-term account with a reasonable interest rate.

An independent financial advisor is a good idea but make sure they really are independent. Good luck

While a pension contribution is a good idea, unfortunately, it isn't going to make much of a dent in £50k. The maximum you could pay in to a pension as a non-earner is £3,600 in any tax year. However, you pay the net amount after tax relief, so it only costs you £2,880. Having said that, you could also make a pension contribution for the same amount for both DC.

Pension savings are not taken in to account for assessing the level of your capital as once you make the payment, the money is tied up until you 'retire', and the earliest you can take pension benefist is 55 now.

Carers allowance and DLA aren't means tested so your inheritance won't make any difference. HB, as stated above, is affected by savings over £16k.

Paying off debts early could be seen as Capital deprivation. A financial advisor would know about benefits so please make sure you run any pass a very experienced welfare rights expert.

'The objective is really to salt this money away so that it doesn't affect your benefits.'

The problem is that, although it's not perfect, the design of the benefit system is that it's supposed to function as a safety net.

So, 'salting away' money is usually seen as willful deprivation of capital.

Gifting it to children, paying off debts early, etc. is willful deprivation of capital because you're meant to use any assets or savings to support yourself before relying on benefits.

This happens, too, to people who are made redundant and get a large redundancy payment.

Or any other payment.

So what onedietcoke said.

If you're in council housing, you may have Right to Buy.

The shared ownership idea's a good one.

Or how about buying a holiday caravan or lodge and renting that out to holiday makers?

Whoops meant a financial advisor wouldnt know about benefits....

Paying off debts early is not 'willful deprivation of capital'.... If someone owes £5k on a credit card charging 20% interest and pays it off then that's just good commonsense. Otherwise you're saying the DWP would rather pay people to stay in debt? Don't think so, somehow.

Chil unfortunately benefits don't always see it that way. They can easily see it as willful deprivation of capital - If you have a regular payment plan that you've been keeping up with on a credit agreement then in their eyes you don't need to pay it all off, and could use the money to live on.

I would make sure you get some proper advice from someone that knows what they're talking about CAB or Welfare Rights before doing anything with it.

You can't buy a house and rent it out to someone else, you'll lose your housing benefit for where you're living now. As you can't own a property and rent somewhere else.

'Paying off debts early is not 'willful deprivation of capital'.... If someone owes £5k on a credit card charging 20% interest and pays it off then that's just good commonsense. Otherwise you're saying the DWP would rather pay people to stay in debt? Don't think so, somehow.'

It is to them. Their role is to support those who have no other alternative, because they have no other assets or capital to support themselves.

A lump sum payment is just that.

They don't take a person's debt level into consideration when assessing entitlement at all.

It's seen as a separate issue.

A person who has savings or assets to the value of over £16K is expected to use those to pay for their accommodation and council tax (again, as pointed out, DLA is not means-tested and CA is not treated the same as other benefits such as IS or JSA in light of means-testing).

Getting rid of money in order to qualify for benefits is seen as willful deprivation of capital.

That is why the OP needs to see an experienced welfare rights adviser.

It might be best to go for shared ownership or buy one's council house.

But it's hard to know without the advice of an experienced welfare adviser.

'You can't buy a house and rent it out to someone else, you'll lose your housing benefit for where you're living now. As you can't own a property and rent somewhere else.'

That's true! Ugggh, I forgot about that!

A very good mate 'owns' a house with her ex-h (she is not divorced).

She was made redundant, but could not get housing benefit because she is still on the mortgage of that house.

Thankfully, she did get another job (although it is cleaning offices and very low pay) and has a boyfriend living with her who helps her cover the rent.

But otherwise, she'd be screwed.

Benefit rules and fairness are often poles apart

indeed expat - it was something that exH and I fell foul of.

When he was in hospital last year (before we split up) I was ok about him coming home, but quite uncomfortable about him coming home that soon. We were advised that if I wanted us to live separately for a while until I was ready for him to come home that I would have to move out with the children and claim housing benefit (not being on the mortgage) and he could go home

It's also the reason why when we did split up I moved out, and he stayed in the family home as he was on ESA at the time and not working, so was getting mortgage interest relief. I was also going onto benefits when we split.

They couldn't help me stay in the family home because I wasn't on the mortgage.

And they couldn't help exH move out to somewhere smaller because he has a mortgage.

Crikey, it's a bloody minefield isn't it?! I do live in a council house, well, housing association. But I need to move to a 3 bedroom house, this one has 2 bedrooms, so I wouldn't want to buy this one! I don't know if my inheritance might affect my entitlement to rehousing either. Sadly my mother didn't leave a will, she had dementia for some time before she died. I'm sure if she had been in sound mind she would have tried to make sure this didn't cause me any problems!

I was thinking about a little ebay business, as it's something I could fit around the kids! At least I could afford to buy stock, though I'm undecided about what to buy and sell!

I thought I would lose the child tax credits though, am I wrong?

Thanks everyone for your advice so far!

You really need to speak to your HA and see if they have other options for you, including part-buy. It might be possible for you to move to a 3-bed HA place and then you could afford to pay a removal company and take the hassle out of it.

And an experienced welfare rights associate, especially wrt CTC because IIRC if your income increases by more than £25,000 in one year that they can be affected.

Don't want to throw cold water on your windfall, but do you not have to pay inheritance tax on monies passed on this way? I always thought that was the case, 40% I thought? Sure someone will be along and hopefully clarify.

If benefits are meant to be a safety net for those who genuinely have no income or means of earning such, shouldn't you use the money to fund your family and come off benefits?

Grumpyvamps if I am not entitled to benefits I will come off benefits. I am going to dclare it when I recieve it, so the benefits agency can decide whether or not I am entitled to any benefits or not!

I want to use this money responsibly and wisely. If I don't do so, it will be gone in around a couple of years and my family and I will be back to square one. Back on benefits. Do I detect a touch of sour grapes? I would rather still have a healthy, living mother.

No, you don't. FYI I'd rather have my father back (died when I was 16) rather than any financial security that left my family.

Inheritance tax kicks in around 300k.

I think the point is grumpy that because of the OP's position as carer for a disabled child she's unable to work, so once the £50k is gone (and lets face it in some parts of the country 50k isn't going to last that long) she'll be back on benefits. So she wants to make the best use of the money, while knowing which benefits that she currently gets would be affected by it.

Thank you MaMoTTaT, you are spot on!

Well, I've got the welfare rights lady coming down early next week, quite conveniently she needs to go through a DLA renewal form with me anyway, but said she'll have all the info for me then! So at least I will know exactly where I stand there. I still don't know what to do with the money but I think I need to see an independant financial advisor about that. I don't even know where to start regarding that! I've never really had any "spare" money before! Ever! Think I'll have to at least take the kids on our first ever family holiday next year though, no matter what!

Forget the holiday. get the house

God, sorry that sounded so insensitive. Best of luck in wehatever you decide. Hope it all works out for the best.