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.

Used to pay off debt, including the mortgage, the money is effectively still there as it's mostly in an asset that the children will inherit and benefit from and they will benefit from their mother not paying interest on a debt. So satisfying the intent of the promise to the mother.

Inheritance Tax (IHT) in the UK is charged at 40% on the portion of an estate worth more than the standard tax-free threshold of £325,000, though allowances can rise to £500,000 if leaving a home to direct descendants. Married couples can combine these allowances to pass on up to £1 million tax-free. While it isn't impossible the op would have to pay inheritance tax on the £80,000 without receiving further money from her mother's estate (for example if her mother's estate was worth £2million and she left it all to someone else) The most likely scenario is either the mother's estate isn't large enough to attract inheritance tax or that her inheritance would fund the tax that is due. The main problem is that inheritance tax is due 6 months after someone dies so if someone's main asset is their house, this would have to be sold quickly before being able to pay inheritance tax. As you say, the liability on the £80,000 is reducing every year anyway. I do think the op would be wise to keep some of the money accessible for emergencies rather than using it all to pay down her mortgage.

Maybe posters can help with your budgeting?

If you earn £31K, how much gross do you have when you add child benefit and the benefits for your children? I expect, rough guess, it's around £40Kpa +

Your biggest outgoing is your private therapy etc for your children.

Is this essential? What kind of things are you paying for?

To be really blunt, they are the things that you may have to reduce, rather than asking how to beat the system.

If you have £80K in savings,it doesn't matter what your Mum's wishes were.
You have savings.

You can't give the money back or hide it as yes, that is deprivation of assets.

You can pay some of your mortgage off to reduce your monthly outgoings.
But you need to check your mortgage because some have an annual limit on over-payment or there is a penalty.

However if that gift was under 7 years from when your mum gives it, to when she passes, you will be liable to pay tax on the money you received so I would keep in mind you may have a tax bill. I assume she gifted it to you in order to try and avoid inheritance tax but you will still potentially be liable if she passes within 7 years of gifting.

The IHT issue only exists if the whole estate is over £325K.

@Lovelyview And you have more than 6 months to sell the house. (It can be longer if you apply. It took us over a year to sell MILs house.)

It seems irrelevant as I had missed that the gift was 7-8 years ago but if you are gifting £80k my guess is the estate including the property would easily reach over £500k which isnt difficult at all in most parts of the country a regular sized home would alone be worth this.

I don't know why you assume that.

My elderly remaining parent has around £60K in total savings , which they don't touch, yet their house is worth around £150K.

Like OP they fall above the threshold for some benefits because of savings but they cannot gift me a significant amount as it would be D of A.

Of course it could be the case its not but most people arent handing over their last bit of money and leaving themselves poor so if they own a home and have any money for themselves, its not hard to go over the IHT threshold.
Again the £80k is irrelevant though as its been more than 7 years.

How are you classing using the money to pay the mortgage as frittering? It's an investment in property and a future asset.

Just take out £800 per month to pay the mortgage and you can more than cover the £500 you say you are short.

Also, even if people aren't getting through to you that it is morally wrong to take benefits money from tax payers who earn less and have less savings, every political party is looking to tighten up benefits eligibility. Even if you would receive money now, there is no guarantee you would still be eligible in future

Yes, but my point was that any inheritance tax would come out of the estate so the op doesn't have to worry about it in relation to the money she has already been given.

Ah ok, this makes sense, apologies for missing the point here

OP

Please read my post

Firstly, ignore the goady threads. It is clear to
me that you are not a scrounger - simply someone who doesn’t understand the system and is trying to work out what to do morally and legally in order to support you and your disabled children.

Firstly, you are a warrior - lone parent to two severely disabled children, recently divorced , (does their other parent also provide care to his children??), mum with dementia, working - that is a lot.

I would use 50 k of your lump some to pay down your mortgage and then clear your CC debts. Keep the rest as savings for now and try and see if you manage on your income then. However, it is likely that you will run out, bar the allowed 6 or 8k - and then it is not morally wrong to apply for benefits to which you are entitled.

regards a wet room - I would look into charities that may provide grants for this - maybe ones specific to your childrens conditions, but there are all sorts of charities - eg ones that consider grants to ex teachers, Jewish women, etc etc. I think there are websites where you can search, or ask chat gbt.

Finally, have your children had an assessment from social services children’s disability team? They are entitled to that and you are entitled to a carer’s assessment. Definitely worth tapping into to see if they can provide any practical or emotional support and advice. Your children should be considered children in need - it can be really helpful to have a SW as a care coordinator so that different agencies can work together. As a Social Worker, much of my role involves advocating to ensure people were accessing relevant support from the NHS and education. Have a look at the Children Act in relation to disabled children and the Social Services Health, wellbeing and care act in relation to this.

Good luck and I hope life gets easier.

Your DC need the money now so use it for your (and their) living costs. When you fall below the savings threshold, claim UC. Otherwise you're just taking the piss out of the system.

So a quick google would suggest higher rate DLA (both components for both children) is £389.20 a week. Monthly that works to £1686 give or take. Added to that is your wage (£2000), child benefit (£194) and child maintenance (£110) that is £3990. You have said that your mortgage is £800, that leaves £3190. Maybe take off another £1500 for other bills - food, electricity, etc, that leaves £1690.

Scotland offers ‘self directed support’ payments where, if applied for, they will fund agreed needs to pay for support workers, services, equipment, etc on a monthly basis. This is not means tested.

Universal credit will add on another £1750, that brings the total available to £3440 - after essential bills. These sums equate to an equivalent ‘wage’ of about £105,000 a year.

As you’re asking for ‘financially savvy’ people to comment, maybe you could share your outgoings. That is an awful lot of care required above and beyond what the direct payments cover that would be being funded, even with the £1690 spare.

Surely you can see why it rubs people up the wrong way for you to also want to keep £80,000 in the bank as well

If the £80k is ring-fenced for life long security doesn't it make sense to pay off some of your mortgage and debts and pay all of that off as soon as you can? That would presumably reduce your monthly outgoings and you may have enough salary to live more comfortably.

What is the money for otherwise?

I can assure you the DLA is not that high and all of it goes on their therapies and care. Every penny. Google is sadly inaccurate with finances, hence asking on here. In no universe is my income anywhere near £100k a year.

Request more money from your ex-husband.

🙄

I think this is the best advice - get rid of any debt - make sure you have good appliances, home repairs are done and that you are fully insured , both home and life - reliable car etc and that your £80k ( reducing) is earning interest - as I said before I think a mindset shift may help here - once the basics are all covered off from savings- Use the pip as family income , assess how much good the therapy is actually doing and be honest in your head about it and if it is helping then use a bit of savings first for that, treat yourselves to a modest holiday every year, - there’s no way your mum would begrudge money spent on this. I understand why she said what she did but in all honesty may not understand how tight things are - maybe try and keep £50k - The secret is using the money wisely to future proof you as much as you can - not see how quick you can burn through 65k - I personally wouldn’t pay the mortgage off - I think it would be better to make sure you’ve got £50k in bank asan accessible back up rather than trying to get down to the claiming level again. Once you’ve paid it off - yes your mortgage will be less- but it’s no longer accessible cash and life can turn on a sixpence and having a spare £5k around at any point is very handy in case of illness, redundancy, stuff breaking down - .

Thank you to all those who have been so understanding of my situation and kind. I don’t want it derailed and the focus shifted onto wider political landscape around benefits and “scroungers”. What I will say, is unless you live a life caring for 2 complex needs children, on your own, in and out of hospital, isolated because either they need me or I’m working, also now caring for my mum, you have no idea how hard it is to make my income
stretch. No more will be coming my way, given their needs I will be able to work outside my home / remotely from hospital or care bases, and I wanted to protect what my mum gave me to help with her grandchildren. I have many faults, but greedy and system playing are not part of them.
A few have asked about their dad - he does no care and I have them 24/7. This is court ordered after verbally abusive behaviour from him towards our son that was overheard. He blamed the stress of our lives. No words. He pays minimum court ordered child maintenance.

I’m frankly baffled as to why you’re tying yourself in knots about how and if to spend your 80 THOUSAND pounds in savings just to ensure you don’t scupper your chances of qualifying for UC. Take a step back for a second and forget all about the UC, you don’t need it. You have assets at your disposal, and are therefore not in the type of financial situation that UC was designed to support. If you stop thinking about the 80k as money you have to get rid of in order to qualify for further handouts, you can start looking at it as a significant pot of money that’s at your disposal NOW to let you live.

baffled? Because I want to be able to know I can claim UC which I’ve been advised I am entitled to given my care situation, once that gift has been spent? Not sure what’s confusing.

You can spend it on normal living costs.

You can overpay your mortgage.

You cannot transfer it into anyone else's name; or move it to any type of savings account that means you cannot access it. It is too late for it to be put in a Trust of any type.

Unfortunately it doesn't sound like your CAB is very well informed.

Thank you for your staggering defence of domestic abuse towards a child 👏it’s almost as insane as my ex’s defence in court.

perhaps I misheard him, it was a busy environment and a lot of information at once. Some great advice and it sounds like overpaying my mortgage and using some for a wet room that I can document is a care need is a good start. Thank you.