Benefits Affected By House Sale

[NorthWestMan]

Hey Everyone,

Looking for a bit of advice for my mother.

She’s in poor health and doesn’t feel that she has got much time left so she’s looking at cashing in her chips so to speak and buying a Caravan on a holiday park. Its always been her dream to do so.

The issue she has is that if she sells up she wont have enough money to survive without her benefits once she’s cleared her mortgage, bought a static caravan and basically settled up. She gets benefits such as disability, ESA etc. (I don’t know the exact details) however as far as we can work out she will lose them all and eat through all of her savings rather quickly. Part of what she wants to do is to ‘gift’ some money to my brother so that he can buy a home, I’ve included rough calculations below.

House Value: £120,000
Outstanding Mortgage: £20,000
Left £100,000

Caravan Purchase: £36,000
Clear Debts: £20,000
Gift to Brother: £30,000

Remainder £14,000

This £14,000 wont be enough to support herself for long so she wants to keep claiming her benefits but we’re stuck as to how she can sell the house, help my brother buy a property all the while keeping here benefits.

Does anyone have any suggestions or previous experience to help?

Thanks in advance

I think you need to research "deprivation of capital" in relation to benefits for your Mum.

The gift to your brother will be what causes the problem. Its likely it'll be looked at that she's deliberately reduced her assets in order to claim benefits.

You really need proper legal advice.

Some benefits don't stop if you have savings iirc such as ESA and pip . However a 30k "gift" might raise eyebrows. Is she of pension age?

Buy a more expensive static caravan and dont help the brother?
She needs to get advice

The reason for giving away the £30k to my brother is to help him but a house. If she didn't give away the £30k and kept it herself would that solve the issue?

If PIP, ESA etc are not means tested then she should be okay shouldn't she?

She would still have too great in savings for any means tested benefits. Reason I wondered about her age was for Pension Credits which are one. If she gave away 30k she would be deemed to have deliberately hidden assets if she ever needed residential care.

Perhaps I’m over simplifying or just don’t understand the benefits system, but surely either one of the following must be true:

Either

She is struggling to support herself to the extent she needs to rely on benefits. Therefore she is not well-off enough to be in a position to give anyone thousands of pounds.

Or

She is sufficiently well-off that she is lucky enough to be in the unusual position of being able to afford to help out a family member to the tune of £30k. Therefore she doesn’t need benefits.

Am I missing something ?!

She is too young for a pension yet.

Even if she didn't give the £30k to my brother she would still not have enough to keep her going for over 10 years.

What would happen if in 6 years she ran through all of her savings?

I would say that it is very clear that she cannot afford to make that gift, regardless.

She can sell the house and buy another but not give away £30,000 and get means tested benefits. they will say that she has deprived herself of capital.Also I think shes on shaky ground if she pays off her debts like this.
Tell her not to do it, last thing she wants is to find herself destitute with no access to benefits because of giving her money away.
Also the DWP can easily look into all bank accounts.

The 20k to clear debts may also be considered to be deprivation of capital if they are not classed as priority debts.

She doesn’t need benefits if she has all that money. That’s really playing the system.

Or this is a wind up ?

The gift will be seen as deprivation of capital. PIP is not means-tested but some ESA is. The problem with buying a caravan on a holiday park is that a) it will have site fees. These are often MUCH more than council tax and rise yearly b) many parks do not have year-round residential licenses c) even if they do it often applies only to lodges, chalets and lodge-insulated vans because otherwise, it's too cold d) many parks have restrictions on how old the vans can be, meaning she'll need to upgrade every so often.

'What would happen if in 6 years she ran through all of her savings?'

Hope she realises that any housing-type benefits will probably not cover all the site fees because the site fees are normally very high. She'll need to make up the difference out of whatever benefits income she has and if not the park can and will order her to leave. It could potentially very messy.

It's a rather ill-thought out romantic ideal she has that doesn't appear to be workable.

Sorry, I think you all may have got the wrong impression here or I may not have explained it clearly. The concern isn't the immediate future but 7 + years down the line when she has gone through her savings.

My concern is that I don't want her to end up with nothing and struggling to pay for food etc.

The gift to my brother was her wishful thinking.

The question I'm trying to get the the bottom of is what happens in 7 odd years when her savings have dwindled to nothing. Will she be entitled to claim again or will she be knackered?

She just wants to kick on and do it but I'm thinking long term for her.

I think you can have a certain amount of savings and still claim benefits but it's something fairly low like 6,000. It would be better for her to buy an 80k property as otherwise she'll just run her savings down supporting herself. I also don't think she can give 30k to your brother and then continue to claim.

I might be wrong but I think she would be expected to be able to support herself if she had access to many thousands of pounds. Isn’t it above about £6k savings that benefits start decreasing? I know it’s hard to think about savings depleting but it would be immoral to try to manipulate the system so she can keep savings and claim. Unfortunately it seems like she is not in the position to make a gift to your brother. If I were advising her I would say she should buy a permanent home in her preferred location- after all if she is not even retirement age does she really want to spend her elderly years in a caravan where the value will probably deplete and leave her with even fewer options as she gets older?

If she's on PIP that won't be affected.
If the ESA is income related then that will be affected by any savings and she cannot deprive herself of capital. if it's contributions based she can claim it regardless of savings.
Any means tested benefits like council tax reduction will be affected.

Noone can say what help if any would be available in the future. In theory she would become eligible for means tested benefits at some point but it is doubtful that would cover all her day to day costs.