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Inherited property - counted as capital for Pension Credit
Hi,
I have a client receiving GSPC, HB, CTB.
Cl’s GSPC has recently reduced by approx £40 per week as the Pension Service are taking into account additional capital she has obtained through an inheritance.
Cl’s mother recently passed away and her property was left to her and her brother and two sisters. The brother was left 50% of the property as he lived with his mother all of his life. In the will, it stated that the house could not be sold and that the brother was allowed to live in the property for the rest of his life. I have not had sight of the will so I am not 100% of the exact wording.
The 3 sisters have and equal split of the remaining half of the house, 1-6th each and the pension service have valued this at £22000 and reduced her pension credit.
Now, the property cannot be sold unless everyone is in agreement. Is there any appropriate case law or regulations appropriate to this situation to argue the capital being disregarded? I have read in the Cpag Wel Ben booklet about trusts and also life interest etc but is this relevant to this situation with it being a will?
Many thanks for any info provided!
Paul
Hi Paul
Maybe worth looking at reversionary interest, which is covered in the DMG Guidance (see link below)
http://www.dwp.gov.uk/docs/dmgch29.pdf
You may also find the capital may be disregarded if you check thoroughly in the caital disregarded section in the DMG.
Hope that helps
The main point will be the valuation that has been put on the interest in the property. If they have simply divided a valuation of the whole, unoccupied, property by 6 then they will have overvalued her interest substantially.
i agree with gareth - a decision maker needs to work out the value of your client’s share of the property with the brother still living there - it may be that there would be very little market for her share in those circumstances, partic if all siblings would need to agree to sell house - hard to see why anyone would think it worth buying.
very common for decision makers to value share of properties as if on sale with vacant possession and no legal complications but that approach has shown to be wrong by upper tribunal on a number of occassions -
see R(IS)5/07 -
http://www.administrativeappeals.tribunals.gov.uk/aspx/view.aspx?id=2129
more recently CPC/2582/2009 -
http://www.administrativeappeals.tribunals.gov.uk/aspx/view.aspx?id=2129
and briefcase summary of it -
cheers ros
“The holders of jointly held capital are treated as though they all own an equal share.”
That only applies if they are joint tenants and not tenants in common. See Hourigan v SoS for the DWP (2002) CA, and the commentary to reg 52 of the IS Regs.
I would imagine that her share of the property must have some value even though she can’t cash it in at present. if someone offered her £1 for her share I imagine she would say NO. Thus her share is worth more than £1 , but almost certainly less than £22,000.
It’s at least arguable, depending on the exact wording of the will, that it creates a trust in which the brother has a life interest in the property which is satisfied by his living there rent free, so that the intersts of the others are in remainder.
I wonder who drafted the will. It might be worthwhile getting a specialist legal opinion to decide exactly what the will does and the nature of the interests taken by the parties under it.
If this is genuinely an interest in remainder, which will only fall into possession on the death of the resident owner (tenant for life) or on his deciding to leave the house (eg to go into care), then that is a marketable interest and there is a market for them. However if this is the correct interpretation it falls under para 5 of Sch 10 of the IS regs as a future interest in property. The same would apply if the true construction of the will is to create a lease for life.
Same para for GSPC.