Inheritance and its effect on state benefits
Friday, January 20, 2012 at 3:09PM 
When you make a Will you should consider the effect of any inheritance upon any Beneficiaries that you have or are currently or will be at the time on state benefits.
There is no legal way for any Beneficiaries to avoid receiving the money even if they then put that money in Trust for their children. The DWP would consider that to be a deprivation of capital and they would treat the Beneficiary as though they still had the money.
Means tested benefits i.e. income support, council tax and housing benefits have limits set for the amount that you can have in savings. If you exceed that limit then you will lose the benefits as somebody on means tested benefits. Above a certain limit of savings currently £16,000 benefits will stop completely. Savings of £6,000 will not affect means tested benefits currently.
The deprivation of the capital rules also mean the Beneficiary would not be able to go out and blow the inheritance to break their level of savings below the required limits. A deprivation of asset finding would mean that you are breaking the rules and committing a fraud which could lead to a criminal conviction/record. Those making Wills should consider the affect of any inheritance of any one beneficiary. If that beneficiary is on state benefits then it may be prudent to consider putting money on Trust for the children of that Beneficiary which may be of more long term assistance to your family.
A good website to check your status regarding benefits is “www.turn2us.entitledto.co.uk”.
If you receive an inheritance and you are on state benefits then you must declare the inheritance or face problems in the future. It could be that your benefits are withdrawn and you receive a demand for repayment from the DWP.
It is an issue that is not always raised when you are making a Will and is not often discussed amongst families or considered by professionals who make Wills.
If you require further information please contact Fiona Davies on 01432 278 179 or fd@kidwellssolicitors.co.uk
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