Inheritance while on Universal Credit: what are my options?

[Stressedmum6761]

Hi everyone! 👋 I'm currently losing my marbles and need to speak to anyone who's been in the same boat.

My nanny passed away nearly 2 years ago now and it's taken a while for her things to be settled and sold etc. My family passed me a letter today addressed to me from my sweet, beautiful nan and a cheque for nearly £12K. I've been in absolute bits all day I keep bursting into tears. I've never had this much in my life and never ever expected anything from my nan at all and it's absolutely thrown me.

The thing is I know I should be absolutely THRILLED with this money, I'm on my own with DD who's 6 now. We've just moved into a council house 2 months ago and I'm on UC top up which also covers my rent, my job doesn't pay well but it's a school job and I get my holidays off with DD. I'm panicking more than anything because I know that as soon as I cash this cheque UC are going to deduct money each month (about £120 if my maths is correct).

My family said they know nan wanted me to put a deposit down on a house, which again I know if I get a mortgage my UC stops and I'm financially liable for the payments and any repairs etc if anything goes Pete Tong.

I'm thinking about just putting most of it in a LISA for now and potentially in the future buying a house...maybe a once in a lifetime holiday with the rest. I'm just torn because if I buy a house, I'll be so much worse off than I am now getting help from UC with rent payments etc. I've just moved into this house and started decorating and making it my own. I'm worried about the money sitting there and me being so scared to spend anything while also having money deducted from my monthly payments. Again, I'm absolutely ecstatic I've got this chunk of money for security but the fact that it's going to effect me whether I spend it or not is flapping me to the core.

What do I do? Has anyone had experience with coming into money while also being on benefits? Thank youuu from a very emotional and stressed mum.

I’m glad I wasn’t the only one who thought this.

Just noticed your post, firstly sorry to hear about your nan. I’ve not read through all
the comments but im a similar boat. I think the best advice I’ve had is to get a business account and set up my own small business after doing some further training. I think you’re allowed up to a year to get things sorted and they still pay the uc as if it’s going into a business they can’t touch it. I already have a job but it doesn’t earn much either and I figured that this would help to keep the money coming in till I get on my feet. Just an idea though.

If you put money into an account in your daughter's name, it will still be treated as though you still had it, so won't help the situation, I'm afraid.

What a horrible post. OP already works - topped up by UC because her wage is low. As mentioned above it’s false economy to disallow all savings for benefit claimants as it makes them reliant on the state for everything. The lower savings threshold for UC is £6000 before it affects benefits. Studies have shown that this figure hasn’t been uprated or reviewed since 2006 and should now be more like £12,000 to allow a decent cushion without further recourse to the tax payer.

You could put the money down as a deposit on a shared ownership property. Then get a mortgage for the rest of your share. The rent element of shared ownership properties is supported by universal credit.

Haven't RTFT but I've read all your responses and looks like you've had some good advice amidst the trolling.
You've mentioned savings for DD future, I'd strongly advise against putting anything in her name. Children's savings become property of the children when they turn 16 and teenagers make terrible financial decisions. Given you're on the breadline, it would be awful to watch her piss away your carefully saved inheritance as most teenagers are likely to do. There's nothing to stop you opening a savings account in your name but keeping it to gift to her when she needs it for something sensible.
Also, to secure her future put your own life jacket on first. As you've said, pay your car off and any other debt. Pay a bit more to furnish your property with decent items that will last, e.g quality flooring instead of budget flooring that you'll need to replace sooner.
Give yourself a buffer so you no longer need to pay for expensive short term credit, e.g. unexpected car repairs, insurance is cheaper paid up front annually instead of monthly etc.
Hope this money makes your life better.

You need to declare to the DWP that you have this money. Otherwise you are claiming money by deception. Don't forget there are new rules about banks reporting you to the DWP if they see large amounts of money being deposited. You cannot have it both ways, you are being unfair. It can be classed as fraud and deception

Yes, it will be treated as though you still had it, I'm afraid.

UC ask for bank statements at random points and if any of these payments showed up as part of the check, she would have a hard time justifying them. She’s allowed £6000 before it affects benefits and there are essential items and furniture she could buy for her new home without it being viewed as deprivation of assets. A benefits adviser can help with spending some of the money in this way.

Honestly the amount of times I've had to repeat myself is insane. At NO POINT. Have I said I want to committ frigging fraud 😂 I've asked what I can spend it on. How much it will effect my monthly payments and that's it. What is wrong with you people?

There are and I bet a lot of them would think nothing of wasting 12k on a new kitchen as it looks a bit 'dated'.

It's 12k not 120k!

This would be seen as purposeful deprivation of capital and would be considered a fraudulent act. The cheque is already in OPs name, she has to deal with it.

Yes, poor people should definitely stay poor forever, and the state should definitely never be realistic, for example by recognising that escaping poverty needs gradual ongoing support that allows for a gradual/incremental improvement in a person's financial circumstances. What ok earth is the point of a system that traps people in a catch 22 situation?

The point should be enabling and allowing people to gradually improve their circumstances so that ultimately they get to a strong and independent position financially and don't require support. Not threatening to pull the rug for a very minor bit of financial good fortune.

How much debt do you have (including overdraft) right now, and at what interest rates?

I did the CTF for my DD, she's 17 now and doesn't know about it. Of course at 18 it legally passes to her, but I don't have any intention of telling her how much is in it until I'm happy that she will spend it wisely.

It's simply not true. She does not need to justify what goes in or out of her account to UC. She just has to stay below the 6k.

They do not care if you have loans, or gifts, or wages. They do not ask you what you are spending your money on

First up, I'm really sorry to hear about your Nan.

I'm sorry to see that you're getting such a rough time in the thread when you just wanted some advice.

There are some people on mumsnet for whom £12k is a drop in the ocean. Like you, £12k is a huge amount to me. I inherited a similar amount upon the death of a grandparent in recent years but because we already have a mortgage and both work full time, we've had much more flexibility about how we spend the money. I've ended up having to use it on my house out of necessity (old building, needed essential repairs, it's not just been cosmetic) but because it's ours, there's an element of investment there.

I still wish we'd been able to be more selective with how it was spent. I'd have liked to have had a big holiday of the type we can't usually afford to go on, to have bought my son a second hand car (so we don't have to share mine), to have done less to the house.

But hey ho, there we are.

My advice would be to talk to your local Citizens Advice Bureau as they'll be able to take into account your concerns about benefits.

The angry people in the comments implying that you shouldn't have council housing are confusing to me, how long do they think that £12k would last in private renting?

I live in an area where there is cheap private housing available and our mortgage is much lower than any rent would be. Like some people have pointed out though, there are a lot of costs involved in moving home such as legal fees, which would come on top of a deposit. Our home was about £100k 15 years ago and houses on our street go for a maximum of £150k so I know there are homes available at that price. It would be well worth looking at what your monthly mortgage payments would be, as well as the council tax and bills, and seeing whether that's a regular payment you can afford on your salary and with any benefits you're entitled to (as well as single person reduction in council tax etc) - I think Citizens Advice should be able to help with this. At least that way you can make decisions with all the information you need.

Do you have any other family members or friends who can support you in your decision making? Who can advise or have been through a similar process recently?

About 2k on the car, £100 overdraft and about £400 on a credit card. I'm very very careful what I spend money on and I've worked hard not to get myself in tonnes of debt. I will probably pay all of this off first and then see what I've got left.

Could you not use the inheritence to do a distance learning course that could help you increase your own earnings so you no longer have to rely on UC and can then afford a home with your own income?

A shared ownership might be better in your position, UC will still pay the rental portion. You can put your £12k down and have a small mortgage on a share of 25%.

The people paying accountants to minimise tax payments are generally net contributors already though, so it’s not a relevant comparison. Although yes, I do criticise people taking part in aggressive tax schemes.

Based on previous comments OP has made a choice to work the hours they do to minimise childcare costs and therefore has their wage topped up by the state. It’s unfair to expect to keep a £12,000 windfall with no consequence on the state top ups. Not a direct criticism of the OP and not singling anyone out but some of the attitudes coming across on this thread are very entitled and don’t see UC/ benefits as something to receive when NEEDED.

I don’t begrudge paying taxes (and would happily pay more if the government used the funds more responsibly and with less waste/ cronyism, but that’s a whole other thread!) but it’s frustrating when people think they should be able to have their cake and eat it, funded by other people.

OP - I’m so sorry for your loss, and it’s lovely that your Nanny wanted to leave you some money. You absolutely should be able to do something nice with some of it but it’d be really unfair if it had no impact on your UC at all. I suppose, in a way, your inheritance will be helping to support your choice to have school holidays off with your children.

I would use some of the 12k to clear any outstanding debt (paying off car for example). Even if your UC payments still got reduced through deprivation of assets, that would be balanced a bit by reducing your outgoings each month on debt repayments.

If you are happy enough in your council home, do not give it up! I'm on UC top-ups, as a single parent I work part-time around my 2 primary aged DC, and have high anxiety every year waiting to see how much my private rent will increase, or if landlord decides to sell up.

There will be a point in the future, when your DC is older, to increase hours/earnings and reduce reliance on UC, and potentially explore possibility of getting a mortagage. Enjoy the time with them while they are young 💛

Yes, you need to prioritise this. Car is maybe 8%, which costs you £160 per year in interest. Credit card likely 26%, costing you £104 per year in interest. Overdrafts are usually 39%, so the £100 is costing you £39 per year in interest. The debts need to be the priority. Any Klarna or ClearPay debts?

The interest rates on the debts are the killer. There is no savings account out there that can match 8%, 26%, or 39% growth, so by having that money in a savings account rather than paying off expensive debts is costing you money.

They do actually. They can do a review and query what this payment is or that payment is. OP should keep receipts just in case.

I would question whether paying off debts with expensive interest rates counts as “deprivation of assets”.