20.06.19
The answer to this question depends on two main factors; the amount of money your child has inherited and the type of benefits they are receiving.
Effect on means-tested benefits
Benefits are split into two types, ones that are means-tested and those which are not.
Benefits that aren’t means-tested such as Personal Independence Payment and Disability Living Allowance won’t be affected by receiving an inheritance, no matter how much your child inherits.
It is the means-tested benefits that could be affected. These include Universal Credit, Income Support, Housing Benefit, income-based Jobseekers Allowance, income-related Employment and Support Allowance and Pension Credit.
A person’s entitlement to these benefits is based on the amount of capital they have i.e. their savings or investments. You will not be entitled to most means-tested benefits if you have capital of £16,000 or more. If you have capital with a value between £6,000 and £16,000 then your entitlement to these benefits will be reduced on a sliding scale. Only those with capital under £6,000 will be entitled to the full amount of any relevant means-tested benefits.
Therefore, if your child receives an inheritance of more than £6,000 then their means-tested benefits will be affected and their inheritance needs to be declared to the Department for Work and Pensions (DWP).
Is there anything we can do?
If your child is left an inheritance following the death of a friend or family member then they are entitled to receive it and the value must be declared to the DWP.
If your child, or someone on their behalf, were to refuse the inheritance, give it away or spend it quickly, the DWP could determine that there has been a deliberate deprivation of assets. In other words, you are not allowed to deliberately reduce your capital to ensure that you continue to be entitled to means-tested benefits.
Once an inheritance is due, there is very little that you or your child can do to ensure that their means-tested benefits are not affected.
Mental capacity
As well as considering the impact on your child’s benefits you may also need to consider whether your child has the mental capacity to manage the inheritance they are due to receive. If they don’t have the mental capacity to manage it then you may need to apply to the Court of Protection for an order to manage the inheritance on their behalf. For more information on mental capacity and the Court of Protection please click here.
How can we prevent problems in the future?
If someone wishes to leave an inheritance to your child, they should consider using a trust instead. A trust can be a useful tool to provide financially for your child throughout their lifetime and ensure that their means-tested benefits are protected. A trust can also allow for others to manage the inheritance for your child.
For more information on the types of trusts that may be relevant to your child, please click here.
If you would like to discuss setting up a trust, applying to the Court of Protection or help with your Benefits our specialist team can help, please contact us.
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12 Responses to “#AskRL – My disabled child has been left an inheritance, will this affect their benefits?”
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My son has severe learning difficulties his father passed away leaving money in his will. Will this affect his personal independence payment? How much is he allowed in his bank account. I’m his appointee.
Many thanks for your comment, Carole. Personal Independence Payment is a non means tested benefit and, therefore, will not be affected by receiving an inheritance. We hope this helps.
Please can you help, I can’t seem to find a straight answer, is there a limit on savings when in receipt of p.i.p
Hi Samantha, thank you for your question. Personal Independence Payment is a non means-tested benefit and, therefore, the amount you receive is not affected by your income or savings. We hope this is helpful.
My brother lives with me and my husband he receives esa and pip
He has no mental capacity
My brother is his appointee for his dwp payments
He has just received 50.000 inheritance
Is this classed as savings we wanted to use this to share cost of buying our house He lives in is this possible please
Thank you for your query. It may be possible to use the inheritance towards owning a share of property that your brother lives in. It is difficult to comment on the affect on his benefits without having more information. However, you mention that your brother has no mental capacity and, therefore, any financial decisions made on his behalf will need to be made by someone with legal authority to do so i.e. an attorney or deputy. Our information sheet (https://www.renaissancelegal.co.uk/wp-content/uploads/2022/11/Renaissance-Legal-Decision-Making-Information-Sheet.pdf) provides more details on this.
Hi
My father wants to transfer one of his houses to my 1 year old child. He lives in non eu country and the property is also outside eu. I receive universal credit for me and my wife and child. If my 1 year old child receives this property in his name which is well over £16000 then are we still eligible for universal credit or universal credit child element or child benefit. Please clarify
Dear Ayan. Unfortunately we are not able to advise on international issues as our legal jurisdiction is England and Wales. We recommend that you use the Law Society ‘Find a Solicitor’ tool to find a firm who may be able to help.
Hi my dad passed away and had left me £15,000 I’m on universal credits.
Can I put the remainder in a trust fund for my son? So the majority of the money doesn’t go on rent etc?
Thank you so much for your question.
Gifting large sums to another person or into a Trust would very likely be considered deprivation of capital by the Department for Work and Pensions (DWP). This means that they would treat you as still owning the money you had given away, so it would still impact your Universal Credit.
For further advice on the use of savings and what the DWP would deem to be acceptable, please contact us and we can arrange a consultation based on your unique circumstances.
If my child without mental capacity has received £50K inheritance and we are holding it for him until he is 18, do we need to contact DWP and apply for Deputy ship or is there an easier way?
Thank you for your question, Alex. The inheritance will need to be disclosed to the DWP if he is claiming means tested benefits and your son is entitled to the inheritance now. This will depend on the precise terms of the gift in the Will. It is difficult to say whether a Deputy Order will be required without understanding more about the gift but this may be required when he is 18 if the funds then need to be given to him.