Savings in my name stopping Universal Credit despite low income

[slowingdown1]

can anyone more financially savvy than me help?
Recently divorced, ex DH pays minimum child maintenance. Have a low
income due to home working in low demand role so I can care
for 2 x disabled children. Yearly
salary is £31k before tax, I save £100 monthly into pension. I claim Scottish disability payments for both kids which go on private treatment / therapies. Each month I scrap by and have a constant low credit card debt despite my best efforts. I have savings that were gifted to me by my mum as long-term financial security of £80k. Although the money is legally in my name, I have made a firm promise to her that I will not use it, so morally I do not feel able to touch it until she is no longer with us.
My current income is low, but because these savings are in my name, they are preventing me from applying for Universal Credit as above
the threshold.
I understand I can’t eg transfer the savings into trusts for my kids as this would constitute deprivation of capital. I can’t ask my mum to eg take it back for the same reason.

You also have £80k regardless of whether you feel you can use it or not. 🙄

You feel morally it’s wrong to start using your £80,000 yet morally it’s right to claim Universal Credit? Ok. Why did your mum give it to you but tell you not to touch it?

Using capital to pay down a debt is not deprivation of assets. A mortgage is a debt. You can also use it to pay off any loans, credit cards or car finance. You are allowed to buy a modest family car and essential household goods or repairs.

In your position I would get professional financial advice to understand how the £80k can be invested so that you can use it to supplement your income. That way, it’ll last longer than if you just spend the cash.

If it was intended for your children’s care needs then start by using £400 a month to cover the surplus cost - this would give you £400 more disposable income a month and is exactly what the money was intended for

Could you put it into a pension? Not sure how old you are, but you can withdraw a lump sum at age 57 (55 till 2028). I'm not sure if paying into a pension could be considered deprivation of assets, you'd have to look into that.

Think about what you could prove if you were audited.

You say you can't quite cover regular living expenses each month. It seems from your previous posts that you have a good handle on your budget so presumably, if asked to, you can prove there's a shortfall each month and you can prove you've been using a credit card to cover it.

There's an asset limit in the first place because they want you to live off your savings rather than claim benefits. It would therefore be 100% reasonable for you to dip into your savings to cover what you're currently putting on credit.

Just don't go on a spending spree and you'll be fine.

I honestly think this is the best course of action, OP. It's a way of investing the money without necessarily being on the wrong side of the benefits system. And if it does make you ineligible for UC, at least you'd have lower outgoings and the money is invested into property, which is a pretty reliable investment.

You could invest it into the stock market, which generally gives the highest returns over long periods of time, especially with an aggressive strategy. But you'd need to let it grow - just let it sit there for 25-30 years. If you did that, you'd end up with a huge sum. But it would make you ineligible for UC and wouldn't solve your current situation of tight monthly outgoings.

Bonds is another investment vehicle, but then you have the same issue as before with UC.

You could do the stock market/bonds thing if you got a better-paying job and therefore didn't need UC. I can't remember what you said your hours were - is it the sort of job where you can do more hours?

Anyway, you can't just have it sitting there, deflating. Invest it, whether in your house or in stocks/bonds.

Forget what you promised your mum. That's completely irrelevant.

I totally understand the responsibility of not wanting to fritter the money away.

If you used the money to greatly reduce your mortgage, then surely even if you still didn't qualify for UC, it would still help. With a chunk paid off the mortgage, you could reduce your repayments a little and that would give you a little more breathing space in the budget.

This system seems crazy to me. If the OP were allowed to invest the money and claim a small amount to cover her shortfall in the short term, she'd one day in the not too distant future be in a position to cover her costs herself and be self-sufficient for good. It would surely save everyone money to do this and provide a higher quality of life/level of financial security for the disabled children who might continue to benefit from the private money when they are themselves older. Unless I'm missing something. I am quite tired to be fair.

Sorry you are dealing with this dilemma OP. I think it's so unfair that severe disability can mean losing all the financial security you might otherwise have had.

OP keeps saying it would be morally wrong to spend the moment but doesn’t think it’s morally wrong to ask taxpayers to support her while she keeps her £80k for a rainy day. People have a really crazy view of the benefit system…

OP you are not on nmw and you have DLA for both children , cms and child benefit. Total would be £60k+.
You have a mortgage and your child benefits are not taxed. It depends on your children's disabilities but there are lots of charities that support non able bodied children for free. Are you accessing those options?
Everything you said points to gaming the system and many people have half of what you receive. To own a house as a single parent is impressive. I would use the money to pay down your mortgage with a £10k emergency fund retained. This will reduce your monthly spend.

If the money had been in a pension though she'd be in a completely different situation - allowed to keep it and the state couldn't effectively take it from her. I don't see why someone with what is presumably a very minimal pension can't pay a decent chunk into it. If it was there already it wouldn't be forfeited.

Using the money to live and rasie kids isnt fritters it away.

Get your advice direct from UC about what you can out intontrust for the kids, paying off mortgage and paying into a pension.

Yeah, you're missing the part where benefits are supposed to be a safety net for people who otherwise cannot work and have no income or savings.

They're not designed for someone to sit on their own pile of money not spending it. She's welcome to invest the 80k.. Alongside her take home pay of 2k a month, disability benefits for her kids, and her "minimal child maintenance" (I'm doubting if it really is minimal atp.. I receive £6.72 per week and would consider this minimal) . She should be more than able to invest and build a sustainable income, all without fraudulently claiming benefits.

I have 4 children, I'm a disabled solo parent, 3 are neurodivergent, and one has extreme feeding issues and disabilities, that recently fled extreme DV and was living in a Travelodge.

Do you even know what people in my situation would give to have £80k sat in the bank?

When I'm sat here eating chickpeas and noodles in chicken stock and calling it soup because we're genuinely stretching the benefits we're entitled to as far as they'll physically go... Yeah 😂😂 you're definitely missing something. This whole post is a slap in the face to every single parent struggling to provide for their kids (disabled or not)

It IS you asset!!

You’ve misunderstood the advisor on not being able to spend it. You can’t give it away etc but you spend it on normal living etc and as far as I know using it for a mortgage lumpsum is also allowed

It's not deprivation of assets to live off the money until it's under the threshold, it's literally what you are expected to do with your savings. You spend it on the shortfall in your income until you have under £16k left and then you apply for UC.
Along the way there may be things you can buy to invest in for the future ie things that will hold their value that you can sell or use to generate income in future and as long as they are not big ticket purchases they will not be scrutinised. But no, spending it on normal life costs is not deprivation of assets and the person who told you it is is confused.

Really, if you wanted to claim benefits, your mum should not have gifted you the money. She should have kept it and just given it as inheritance. However, as soon as you received that inheritance your benefits would stop anyway. So you never would have been able to claim benefits long term.

It's not an 'odd position' or a 'catch-22'.

You have £80k, and people with £80k don't get benefits, it's essentially that simple.

Of course you can't transfer it to someone else so that you can claim benefits.

That is literally why that rule is there - so that you can't have £80k and also get money from the state.

This is really unfair. She's not asking this at all. She's trying to understand what she's able to do after receiving some bad advice from some numpty at the citizens advice bureau. She's been told she can't use it to live on and claim UC in a few years when it's gone, which is simply wrong. That's perfectly fine, not illegal and not immoral.

The catch 22 is the bad advice CAB have given her that she can't spend it on living costs and claim UC when it's gone. Because she can.

It won't be her asset when it's been spent on normal living costs...

In your position I would stop worrying about benefits, and start thinking about how you can get yourself to a position where you don’t need to be thinking about benefits.

The “benefits trap” which you’ve discovered here is partly why it’s so difficult to get off benefits once you’re on them. But you’re not currently on them, and have decent savings, so you’re in a really good place for decision making.

How long have you had the £80k for? My guess is that your mum gave it to you to avoid/reduce inheritance tax.

You need a buffer, and some protection against possible inheritance tax, so you should keep £20k in the account. What can you do with the £60k to improve your financial situation?

Looking from the outside, the two obvious things are either invest in training so that you can earn more. Or pay off some of your mortgage and then re-mortgage so that you’re paying less each month.

Is your ex paying maintenance? If not, go to cms and make sure that you’re getting what you’re entitled to.

I know that your mum wanted the money for the kids, but she didn’t know that this would all happen. If she had, and she saw how tricky things were, she would definitely want you to spend it on improving things.

I'd use the money to offset the shortfall in your income. Presumably another £500 a month would help you out at the moment so even if you didn't find any other way to increase your income the £80,000 would last more than 13 years drawing down £500 a month. Once your Mum gave it to you she had no say over how you use it. Obviously her grandchildren's wellbeing was on her mind when she gave it to you and your current circumstances mean it is useful now rather than later. You could discuss it with her if you want but you don't have to. Not being ghoulish but I presume she has additional assets which will come to you after she dies. You need to forget universal credit and use the assets you have to create the best life you can for you and your children now.

Paying for your housing wasn’t seen as deprivation of assets

if you are clearing a debt, the mortgage as your monthly expense outreach your monthly incoming, this would be the ideal situation

as you are not primarily trying to off load the savings to just get UC

you said up thread your outgoings are more than your incomings

make a list of incoming and outgoing, including interest on the £80k and keep bank statements to show this

pay the £80k of your mortgage, which will in any case reduce your outgoings - making your life easier