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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Does a monthly allowance count under capital disregard rules

Cornac Hale
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North Lanarkshire Advocacy, Advocacy Worker

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Joined: 31 October 2019

Happy New year good folks,
I have an 18 year old with mental ill health who is on UC. His mum died recently and she has left him some money but arranged via her sister who is executor to pay him £200 monthly from his inheritance.The rationale being if he gets a lump sum he may make unwise purchases and fritter the money away as he has some issues with drug use.
At the moment the executor will not/cannot tell us the value of the estate but it may be around £20k split between two siblings and a grandmother.
The question is, does this income have to be declared to DWP? Does £200 monthly fall below the capital disregard rules or is it counted differently?

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Has this arrangement been formalised legally?

Cornac Hale
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North Lanarkshire Advocacy, Advocacy Worker

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I am trying to get more information. I believe (have seen no paperwork) that before her death mum arranged for her sisters to be executor and the monthly arrangements were put in place. The solicitor for the executor has written to my client to say the estate is being administered at the moment and once all debts, gifts and other outlays have been attended to he will receive a copy of the inventory. In the meantime the executor is content to begin the monthly payments and the letter asked for bank account details.
I have responded to the solicitor indicating my person knows about their Legal Rights under Scots law to claim 50% of movable estate and to record this on file.

Income Max
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Weymouth & Portland Citizens Advice

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It will depend on exactly what the arrangement is. It sounds as though there is some form of trust. You will need to see a copy of the will to determine the terms on which your client is entitled to the money as this affects how UC treats it.

The short version is that if your client could legally demand the lump sum at any time then the entire sum is likely be taken into account as capital. If he is only legally entitled to £200 per month then the £200 will likely be taken into account as unearned income.

stevenmcavoy
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Welfare rights officer - Enable Scotland

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Income Max - 08 January 2020 12:52 PM

It will depend on exactly what the arrangement is. It sounds as though there is some form of trust. You will need to see a copy of the will to determine the terms on which your client is entitled to the money as this affects how UC treats it.

The short version is that if your client could legally demand the lump sum at any time then the entire sum is likely be taken into account as capital. If he is only legally entitled to £200 per month then the £200 will likely be taken into account as unearned income.

I agree with this summary.

you also want to check if any official trust is discretionary in the sense that can the “trustee” decide to pay from the trust or not but it doesnt sound like it.