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Capital deprivation following inheritance where used to buy house

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Welfare Rights Adviser - Southwark Law Centre, Peckham

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ClairemHodgson - 25 January 2017 03:17 PM

person turns money into a house.  person still has the capital which was previously represented by the money and is now represented by the house.  one’s house is not capital for means testing purposes (unless they’ve changed that rule as well). 

say someone is renting a house and claiming hb.  person then inherits a house, so gives up the tenancy and hb claim and moves into the inherited house.  is there an analogy there that would be helpful?

clearly we all think its seriously counter intuitive that someone should be prevented from securing themselves a permanent home that no one can ever take away by the operation of the deprivation rules.

i was sure that there used to be something that would assist in this type of situation, but it was so long ago .......

I remember a very similar discussion about a parallel situation a few years back (on the old forum - and I can’t see where the archive has gone or I’d link to it) where I was trying to see if there was a way around the deprivation rules for a client approaching retirement and about to get a £30k redundancy payment. I thought the purchase of an annuity would do it - in fact, I might have been so convinced it was a goer that I may have already advised her to do this. I was roundly slapped down on here - fortunately. It was even more fortunate that the redundancy was still a couple of months in the future.

Paul_Treloar_AgeUK
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Information and advice resources - Age UK

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Just to be clear on this, the reason its a problem is there isn’t an Assessed Income Period in operation for the client, as it’s likely to be coming to an end before the inheritance will be received. Otherwise it is a change that woudln’t need to be reported at all to DWP.

As more AIP’s come to an end (and no more come into force of course), its likely that there could be more of these types of situations occuring and may explain why there isn’t much case law or guidance on the issue to date.

EKS_COTTON
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Very good point Paul.

Just wondering 7-8 months on, what happened in this case?

 

Paul_Treloar_AgeUK
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Don’t know Emma. As we provide second-tier advice, it’s often the case, unfortunately, that we don’t find out about the outcomes of the cases we advise upon (which can be a little frustrating to say the least).

Dan_Manville
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A suggestion that has been utilised with one of my clients due to her mental ill health would be to put the estate into a discretionary trust with a relative with a caveat that should the trust purchase a house the equity would rest with the beneficiary.