Universal credit and inheritance?

[Vickix118]

Okay so I really don't want to sound greedy so I'll give some back story...

In January 2018 my father in law was diagnosed with terminal brain cancer thankfully he has outlived his prognosis but we have been told not to expect another 12 -18 months... anyway he recently was paid his life insurance early due to his policy's t&c he was aloud it before he died. He gave my partner 22k to put down as a deposit for a house so we can finally get on the property ladder.

Here is where we've got a bump In the road we're currently on universal credit getting around £500 a month as my wage is very low as I'm on maternity leave getting around £200 a month. But now because we have the "savings" (inheritance) our universal credit has been stopped leaving us £500 short a month. We currently are not in any position to buy as we are due a baby in 12 days and still have a year left on our tenancy as we took out a long one to be financially stable. If we have to take a £6k chunk out of the inheritance for the next year we basically can't afford to buy a house again once you take in to account all the fees etc then we are back at square one also I feel awful that we've been given so much money for a house but we have no choice but to spend it on our bills.

Has anyone had this issue themselves ?
Can we transfer the money back to his parents until we are ready to buy?

I honestly don't know what to do as the only reason we're clamming UC is while I'm on maternity leave to help boost our income and now it's a moot point and we're basically going to loose 6k of my father in laws money just to live. Usually I would be 100% up for using it towards living costs but when your dying father in law gives you a set amount for a house and you have to spend 6k just to live the guilt and stress is killing me as it's all because of me

Please be gentle on me I really do not want to sound greedy! I just feel massive amounts of guilt because it's not my inheritance to spend but I feel like I'm the reason it's got to be spent if that makes sense.

Thank you for any reply and well done for reading all of this!

P.s sorry for any grammar errors it's 1:30am

Some shocking advice on here. Do not send it back. The DWP will consider it a deprivation of assets and you still will not get UC. It doesn't matter what excuse you give.

The inheritance tax is only if he has an estate worth over £325,000 and it is usually the estate that is taxed, not the recipient. Go to CAB to get some proper advice and I would tell FIL to get some financial advice too.

Since it turned up without you knowing anything about it, if it's only just happened you may be able to just transfer it back to MiL and say it turned up in your bank account in error when FiL made a mistake moving his assets and it's actually your PiLs and has been returned. If it's been sat there a while and/or you've told the benefits people it's a gift you're probably pretty screwed but you might want to seek advice from people who know the law.

Unless you can buy now (look maybe into shared ownership) you will just need to loose the benefit. Benefits are for people who cannot afford rent and your windfall means you can.

I work in welfare. Don't give it back. That's intentional depravation in order to receive an award. Don't spend it unwisely and quickly as that could be deemed depravation also. Other than it depleting naturally you will need to end your UC award then restart when you drop below £16k.
Truly awful advice in the main and most will have the DWP looking at you unnecessarily harshly because you've taken some bad advice. It's your money. You're over the threshold. You don't qualify. Other than depositing it with a Housing Association as part of a shared ownership scheme I can't see you will qualify. Imagine you were earning £22k rather than maternity pay. You wouldn't expect to receive the same amount of UC then. Sorry but I would contact the DWP asap to avoid overpayment. It's not necessarily the wishes of the parties involved but unfortunately it's the regs. Rarely will any means tested benefit allow the wishes of a third party benefactor to override the stringent rules.

Op can give it back and let dwp know it's gone back so that's not bad advice.

Who is Yo know why it was transferred. So of course she can give it back.

Op can give it back and let dwp know it's gone back so that's not bad advice.

She can give it back but she'll be treated as if she still has the capital. It's awful advice.

Your second paragraph makes no sense.

So you have £22k in the bank, and still want the taxpayer to subsidise you? It's unfair. You should have thought this through before accepting the money. Sounds like you want to have your cake and eat it.

Type "Notional Capital" into Google. That's how the DWP will treat it if you give it back, get rid of it, move it or anything else to ensure you keep your UC
Better to take advice from the regs rather than someone's opinion on what they would do

There is a bit of scary wording on this post about Inheritance Tax, some while well-intended is slightly wrong.

1. If your FIL has not used up his nil-rate band allowance of 325k in the past seven years from the date of the gift, this gift will have the NRB applied to it FIRST before the estate. So the OP would not have additional tax to pay.

2. If the NRB has already been used on earlier gifts within the seven year period, then there may be an annual exemption available. If he has not made any gifts (subject to other allowances) in either the year of the gift or the year before, you can use both allowances against the gift to reduce the amount taxable to IHT. The annual exemption is £3000, so if both allowances are available IHT at 40% will be due on £16,000, not £22,000. This equates to £6,400.

3. IHT on a gift made before death is payable by the RECIPIENT at the first instance. It is not a liability of the estate. It must be included in the reporting of the estate for the purposes of calculating any remaining NRB, but is not a debt the estate is liable to pay.

There were other things I wanted to mention but completely lost my train of thought.

I would put IHT out of your mind OP unless you know your FIL has been gifting left, right and centre (to anyone who isn't his spouse).

As soon as your savings drop below 16k you can reclaim UC. However there will be a reduction in your Uc amount for any capital over 6K. I think it's reasonable to think you can't claim benefits with significant capital. It's unfair that people on tax credits could have that 22k and still claim tax credits, in fact they could have 100k in capital and still get them if their money isn't earning much interest. It's quite shocking when you think about it and probably why they have changed the rules.

@minesagin37
Calm yourself down. I was asking a bit of advice on a topic the OP was talking about that never even crossed my mind. The OP answered my question kindly so no need for you to jump down my throat. Try getting out the right side of the bed tomorrow.

When you get a mortgage you will lose the rent part of your award but you will get a bigger work allowance so you can earn more before they take money off you

Get a break clause in your rental and buy honestly I would If i had the chance