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Thread: Inheritance, ESA & Pip

  1. #1

    Inheritance, ESA & Pip

    Hi All, A general enquiry if any one could help please. I am due to receive £12,000 inheritance soon, I understand it needs to be declared and I understand why. I would like to pay off my debt management plan of £10,000 with the money. Would this be allowed? Would I be required to declare this?
    Deperately trying to get all information before I do anything wrong. Thanks in anticipation

  2. #2
    Senior Member
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    Hello HattieV

    Are you on income related benefits?

    If so, I would write to the DWP and inform them of when you expect to receive this money and what you would like to use it for - before doing anything with the inheritance.

    Good luck.

  3. #3
    You do have to declare the money and I believe you're not allowed to pay off debt with it as that is seen as deprivation of capital in order to claim benefits.

  4. #4
    Senior Member nukecad's Avatar
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    Hi HattieV,

    As the others have said it depends if any benefits that you have are Contribution Based or Income Related, or some of each.

    If you could tell us what benefits you currently get we can give better advice.
    If you get ESA then it might help if you can tell us when/how you started claiming it, and how much ESA you currently get.

    Contribution based benefits are not affected by savings, but you should still tell the DWP that you have them.
    Income Related benefits are affected by savings/capital, how much depends on the total amount of savings that you have.

    Again as already said you should not pay off your current debt plan all at once (at least not without thinking about it and working a few things out very carefully); if you do then the DWP can count it as if you still had the savings and can still reduce any IR benefit that you have.

    You can only pay off debts that are immediately due, and by it's very nature a repayment plan is due over time not immediately due.

    If you can tell us what benefits you currently get, and if you already have any savings apart from this inheritance, then we can work out just how things will be affected for you.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  5. #5

    Thank You for help so far ..

    To clarify, I receive ESA in support group, with extra for being severely disabled, plus extra for Disability Income Guarantee. I receive PIP low rate mobility and high rate care, I have a total income from these two benefits of £1,220 every 4 weeks. I have usually around £1,000/1,500 in savings.
    I have been on benefits for over 20 years, trying always never to place a foot wrong as I feel quite terrified of them and their power to withdraw or withhold, having read some scary stories in recent years. However Inheritance is rather a big issue, I’m extremely grateful for all advice.
    Quote Originally Posted by nukecad View Post
    Hi HattieV,

    As the others have said it depends if any benefits that you have are Contribution Based or Income Related, or some of each.

    If you could tell us what benefits you currently get we can give better advice.
    If you get ESA then it might help if you can tell us when/how you started claiming it, and how much ESA you currently get.

    Contribution based benefits are not affected by savings, but you should still tell the DWP that you have them.
    Income Related benefits are affected by savings/capital, how much depends on the total amount of savings that you have.

    Again as already said you should not pay off your current debt plan all at once (at least not without thinking about it and working a few things out very carefully); if you do then the DWP can count it as if you still had the savings and can still reduce any IR benefit that you have.

    You can only pay off debts that are immediately due, and by it's very nature a repayment plan is due over time not immediately due.

    If you can tell us what benefits you currently get, and if you already have any savings apart from this inheritance, then we can work out just how things will be affected for you.

  6. #6
    Senior Member nukecad's Avatar
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    I guess that you were getting Incapacity benefit before being moved to ESA then?
    That could be important.

    But yes, at least some of the ESA that you get is Income Related and so will be affected by having a £12,000 inheritance.

    Your PIP will not be affected.

    I'm not at home at the moment but will take a look at the numbers for you later.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  7. #7

    Thank You, much appreciated

    Yes, I was on Incapacity Benefit & DLA previously, I also get full housing benefit & some council tax benefit. I will be 60 in November ‘19. The inheritance is due March ‘20 after completion of grant of probate. Other beneficiaries have already taken theirs, I have opted to wait the full length of time just in case anyone contests & to avoid having money then having to send it back. I am also due a private pension in November 19 from when I worked finishing in ‘97, I believe this to be around £2,500 although unsure if it is a lump sum or paid monthly.
    Finally, Thank You again for sharing you knowledge, much appreciated.
    Quote Originally Posted by nukecad View Post
    I guess that you were getting Incapacity benefit before being moved to ESA then?
    That could be important.

    But yes, at least some of the ESA that you get is Income Related and so will be affected by having a £12,000 inheritance.

    Your PIP will not be affected.

    I'm not at home at the moment but will take a look at the numbers for you later.

  8. #8
    Senior Member nukecad's Avatar
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    Hi again,

    There are 2 future issues there, the inheritance and then the pension, lets deal with the inheritance/savings first.

    Here's some numbers that should give you an indication of what to expect.

    From what you have told us then your current ESA is made up of-

    £73.10 Personal Allowance (Contributions Based).
    £38.55 Support Group (Contributions based).
    £16.80 Enhanced Disability Premium (Income Related)
    £65.85 Severe Disability Premium (Income Related)

    £194.30 Total weekly ESA.
    £111.65 is Contribution Based ESA.
    £ 82.65 is Income Related ESA.

    Any savings that you have that are over £6,000 will affect the Income Related ESA, but will not affect the Contribution based ESA.
    (They will also affect your Housing Benefit, and possibly/probably your Council Tax Relief).
    Any savings over £16,000 will stop payment of Income Related benefits entirely, but not Contribution Based benefits.

    Savings between £6k and £16k means that for every £250 (or part of £250) that you have above £6k they will deduct £1 from your IR benefit.

    In your case lets say that you are going to have existing savings of £1,500 plus the inheritance of £12,000 - giving a total of £13,500 savings.

    That would mean you have £13500 - £6000 = £7,500 to be taken into acount.
    7,500/250 = 30.
    So they would deduct £30 a week from your Income Related ESA.
    Leaving you with £164.30 ESA a week.

    (I've ignored the Private Pension there, by the time March 2020 comes your ESA may have already been reduced a bit for the pension - see the next post).

    Your Housing Benefit will have a similar reduction of £30/week because the same savings rules apply to HB.

    Council Tax Relief has it's own rules for each Local Authority, you will need to ask your council about how savings would affect it in your area.

    PIP is not affected by savings at all. You'll still get £110.85/week (£443.40 every 4 weeks) for PIP.

    Note about spending your savings while on Income Related benefits:
    Again as said above you should not pay off your current debt plan all at once (at least not without thinking about it and working a few things out very carefully); if you do then the DWP can count it as if you still had the savings and can still reduce any IR benefit that you have.

    Don't make any major purchases either without clearing the purchase with the DWP first, the same rule applies and unless you get major spending approved by the DWP they can/will treat it as if you still have the savings.

    It's known as 'Notional Capital' and has a few special rules which reduce it over time, but it's best to try and avoid that situation by getting any major spending approved first.

    The reason for that is that the DWP/government expect you to live off your savings, to a certain extent, rather than spending them all at once and then claiming Income Related benefits.
    Last edited by nukecad; 07-24-2019 at 09:33 AM.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  9. #9
    Senior Member nukecad's Avatar
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    Regarding the Private Pension.

    You do need to tell the DWP about it when you start to receive it.

    If it's a lump sum then it will be added to your savings and the above rules will apply to the new balance.

    If it's paid monthly/weekly then its only likely to be a small sum, but that will be deducted from IR benefits because it's income.
    (There again if it's £2,500 a month then it's probably going to stop ESA/HB/CTR altogether - but you'll then have £2,500 a month coming in anyway).

    A lump sum could be a problem because if it's £2,500 or above then when added to the expected inheritance that could take you over £16,000 total savings - and all your Income Related benefits would stop being paid until your saving dropped below £16,000 again.
    (CB ESA and PIP would still be payable).

    I think you need to find out just how this pension is going to be paid,and how much a month if it's monthly, so you can work out how it will affect your benefits and what your total savings are likely to be when the inheritance comes.
    Last edited by nukecad; 07-24-2019 at 09:49 AM.
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

  10. #10

    Thank You .. excellent guidance

    Thank You for explaining so thoroughly, I now have a much clearer picture of what I need to do and the consequent effects this inheritance will have.
    My initial reaction on hearing of this gift was to refuse the inheritance, however kindly intentioned for someone in my position it is potentially a huge worry, I still feel that may be best.
    Unfortunately although my benefit history has proceeded remarkably well I still don’t have full trust in the system, I have a fear of everything going quite out of control, and I don’t have the energy to fight the system. It would be a huge burden.
    I now have much food for thought.
    Thank you again for sharing experience and knowledge .. priceless
    Regards Hattie V
    Quote Originally Posted by nukecad View Post
    Hi again,

    There are 2 future issues there, the inheritance and then the pension, lets deal with the inheritance/savings first.

    Here's some numbers that should give you an indication of what to expect.

    From what you have told us then your current ESA is made up of-

    £73.10 Personal Allowance (Contributions Based).
    £38.55 Support Group (Contributions based).
    £16.80 Enhanced Disability Premium (Income Related)
    £65.85 Severe Disability Premium (Income Related)

    £194.30 Total weekly ESA.
    £111.65 is Contribution Based ESA.
    £ 82.65 is Income Related ESA.

    Any savings that you have that are over £6,000 will affect the Income Related ESA, but will not affect the Contribution based ESA.
    (They will also affect your Housing Benefit, and possibly/probably your Council Tax Relief).
    Any savings over £16,000 will stop payment of Income Related benefits entirely, but not Contribution Based benefits.

    Savings between £6k and £16k means that for every £250 (or part of £250) that you have above £6k they will deduct £1 from your IR benefit.

    In your case lets say that you are going to have existing savings of £1,500 plus the inheritance of £12,000 - giving a total of £13,500 savings.

    That would mean you have £13500 - £6000 = £7,500 to be taken into acount.
    7,500/250 = 30.
    So they would deduct £30 a week from your Income Related ESA.
    Leaving you with £164.30 ESA a week.

    (I've ignored the Private Pension there, by the time March 2020 comes your ESA may have already been reduced a bit for the pension - see the next post).

    Your Housing Benefit will have a similar reduction of £30/week because the same savings rules apply to HB.

    Council Tax Relief has it's own rules for each Local Authority, you will need to ask your council about how savings would affect it in your area.

    PIP is not affected by savings at all. You'll still get £110.85/week (£443.40 every 4 weeks) for PIP.

    Note about spending your savings while on Income Related benefits:
    Again as said above you should not pay off your current debt plan all at once (at least not without thinking about it and working a few things out very carefully); if you do then the DWP can count it as if you still had the savings and can still reduce any IR benefit that you have.

    Don't make any major purchases either without clearing the purchase with the DWP first, the same rule applies and unless you get major spending approved by the DWP they can/will treat it as if you still have the savings.

    It's known as 'Notional Capital' and has a few special rules which reduce it over time, but it's best to try and avoid that situation by getting any major spending approved first.

    The reason for that is that the DWP/government expect you to live off your savings, to a certain extent, rather than spending them all at once and then claiming Income Related benefits.

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