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Funeral Plans and Deprevation of Capital

CMILKCAB
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Benefits advisor, NHS Project - Castlemilk CAB, Glasgow

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Would the purchase of a funeral plan from a lump sum payment be regarded of deprivation of capital for benefit purposes?

Large volume of people in Glasgow getting lump sum payments under the Councils equal pay settlement.

Will take many over the £16,000 for benefits.

Would purchasing a pre-paid funeral plan be classed as a reasonable expense for purposes of getting below £16,000 limit??

stevenmcavoy
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Welfare rights officer - Enable Scotland

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the test is if they acted with a significant operative purpose of obtaining benefit.  so, did they know what the rules were and act with the motivation of increasing or obtaining benefit.

in practice the dwp may not decide it was deprivation but if the client does it for the purpose suggested then yes it is deprivation going by the rules.

Elliot Kent
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This isn’t really the right way of looking at this. There aren’t a list of things which are or aren’t “reasonable expenses”. The question is whether the particular individual has incurred the expense with the deliberate aim of retaining or increasing their benefit entitlement.

If A receives a lump sum and spends it on a funeral plan without giving a thought to benefit issues and just because it is something she has always wanted to do and because she thinks it will relieve pressure on her family in the future, then she has probably not deprived herself of capital.

If B receives the same lump sum and spends it on the same funeral plan because someone has told her that the DWP are likely to regard it as a reasonable expense and therefore she will be able to retain access to her Income Support, then she has almost certainly deprived herself of capital.

[ Edited: 4 Jul 2019 at 07:54 pm by Elliot Kent ]
Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Could it be argued that a funeral plan is an asset, in which case they haven’t deprived themselves of any capital (to the claimant herself, the value of the asset is equal to the cost)?

If this is the case, they’d probably be fine, because I doubt these plans are transferable/refundable, so under the valuation rules for means-tested benefits will have a nil value.

Elliot Kent
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Charles - 04 July 2019 06:43 PM

Could it be argued that a funeral plan is an asset, in which case they haven’t deprived themselves of any capital (to the claimant herself, the value of the asset is equal to the cost)?

If this is the case, they’d probably be fine, because I doubt these plans are transferable/refundable, so under the valuation rules for means-tested benefits will have a nil value.

This idea has come up in a few threads recently but seems to be answered by R(SB) 40/85. If the claimant spends the money on buying a funeral plan, he has still deprived himself of the cash even if he has acquired a different asset in its place.

Paul_Treloar_AgeUK
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Information and advice resources - Age UK

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Except if they’re claiming Pension Credit when it is specifically disregarded.

HB Anorak
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Benefits consultant/trainer - hbanorak.co.uk, East London

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Just to pour a bit of cold water on this … if any of these settlement beneficiaries have been getting HB and CTR down the years, I would advise them not to spend it all at once.  There will be disappointing news in the post before too long.