Universal Credit and Inheritance

[NewnameLucy]

I work but receive some Universal Credit. I will be receiving some inheritance in the coming months and it is a large amount (over £16k) but I’d like to use it to pay off residual debt from my former marriage (loan, credit cards, online shopping account) as these are making my outgoings so high that the cost of living is difficult.

Am I allowed to use the inheritance to pay off debt? I am not sure who to contact and I am worried they will close my claim or I will get into trouble.

Thankyou.

I think once you’ve come off UC you can’t claim again for 6 months so you would need to keep enough to at least live on for 6 months.

You would have to declare the inheritance. Over 16k in savings inheritance or other source would stop universal credit you could spend it then reopen new claim. You could be in trouble if you don’t declare it (fraud).

It sounds like OP wants to use all the inheritance to pay off the debt in one go though, so she’d be stopping the universal credit but then needing to apply again practically the next day once debts are paid off.

OP will you be using all the inheritance to pay off the debt or will you have any left? If so how much? I wonder if citizens advice or step change for debt advice could help you?

Thankyou. I don’t want to not declare it, I just want to have an idea of the process/what to expect as I am Autistic and not knowing makes me feel anxious.

I had hoped to be able to use it to pay my debt immediately, in which case it would all then be gone (assuming I’d be allowed to inheritance to pay debt) so would this still close my claim?

Thankyou.

Thankyou. Yes, I would have to use all the inheritance to pay the debt unfortunately.

I have just checked universal credit rules (I am not qualified or benefit advisor) but common sense would tell me get the money into your accounts declare it, spend some on the highest priority debts (ask the national debt helpline for advice) to lower to under 16k total savings then you can keep the claim open. It’s not 6 months for a new claim you can restart in 6 months from change of circumstances. DWP start investigating if they decide you spent savings to intentionally deprive assets to keep claiming benefits.

The UC Regs 2013 at Reg 50 (2) are crystal clear; paying off debts you owe is not deprivation of capital.

www.legislation.gov.uk/uksi/2013/376/regulation/50

Where on earth did that come from?

There's actually a 'rapid reclaim' set up specifically for those coming back to UC inside 6 months.

Paying off debt is fine. Buying a Chanel handbag for your daughter as someone was thinking of doing on here wouldn't be a good idea.

If you acquire the cash and disburse it on your debts in one monthly Assessment Period and report what you've done before the end of the AP you should be OK.

Paying off debt is usually considered a reasonable expense - you still gave to declare the inheritance, but I’d be surprised if the DWP stopped your claim.

https://www.gov.uk/guidance/universal-credit-money-savings-and-investments#reducing-your-money-savings-and-investments-on-purpose

You can use it to clear debts but if you were to for instance pay for an expensive holiday they would ask questions. You need to be able to show the money coming in and the money paying for debts, tell them you have done this. Please once cleared get rid of credit cards, it’s a great opportunity (for sad reasons) for a fresh start

Thankyou. This is very helpful. I do plan to pay things right away.

Thankyou. Yes, I intend to. I have unfortunately had to use the CC’s to pay normal living expenses (food, fuel etc) for some time now so I can use money I have to pay the loan, so it’s a huge relief to be able to get myself out of such a financial mess and hopefully just be able to live a normal
life.

The exceptions are paying off debt and purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

There's a bit of latitude there. A weekend's holiday in a caravan in Scarbados would be OK. A month in the Seychelles would not.

I received a financial settlement from my ex, when we were in the process of a divorce, that exceeded £16,000. I informed UC that I was going to be receiving it and using it to pay off debts. When I received it I paid all my debts straight away and then had to contact UC again to let them know how much was remaining in my account. My UC didn't have to stop at all, I just kept them in the loop.

I think the best thing to do is to ask your work coach via a message in your journal.

I have heard some people say on here that if a sum of money comes into your account and then leaves it before your next monthly payment it doesn't count as assets, but you should definitely double check that!!

The other question is whether paying off your debts would count as deprivation of assets. I really can't imagine that it would, but again- best to check.

The UC Regulations 2013 are crystal clear about using capital to reduce debt:

A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or

(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

The other principle is that changes within an AP apply for the whole of that AP if there are two changes the one that applies is the latest. That's why I'm confident that receiving the capital and immediately paying down debt in the same AP would not be an issue.

Yes but as asking people on the internet rather than people who are the benefit advisors who work with the system however well meaning is not always the best approach. If you want a sure answer your uc journal would have a written record etc.

Can you talk to the executor of the estate about how you receive your share? It may be possible for the executor to pay your inheritance directly into your debt accounts so that you never have a credit amount of savings which could jeopardise your UC claim. It is perfectly legitimate to use your inheritance to pay off debt, and this doesn't count as any kind of wrongful deprivation of assets. It is also legitimate to spend out immediately on important long-term purchases that might reduce your cost of living - e.g. if you have an elderly and inefficient washing machine that is making your energy bills unnecessarily high, or if your car is an old banger that costs you £750 every time you need to get it through an MOT you can spend from your inheritance on a new washing machine or new car entirely legitimately, but any such purchases need to be done very swiftly as if the money is sitting in your account for any significant time you could be deemed to have excess savings and your claim will stop.

You've more faith then I have that DWP staff know their own rules!!

It doesn’t help to ask here for advice before OP does anything in the future, OP has already advised that they are autistic so any knowledge gained is I consider helpful.