How does inheritance impact disabled benefits?

Means-tested and non-means-tested benefits.

Benefits are divided into two categories: means-tested and non-means-tested. 

Receiving an inheritance will have no impact on non-means-tested benefits like Personal Independence Payment and Disability Living Allowance, regardless of how much your child inherits.  

The means-tested benefits are the ones that may be impacted. Universal Credit, Income Support, Housing Benefit, income-based Jobseekers Allowance, income-related Employment and Support Allowance, and Pension Credit are all examples of these benefits. 

 The amount of capital a person has, such as savings or investments, determines their eligibility for certain benefits. If you have £16,000 or more in assets, you will be ineligible for most means-tested assistance. Your claim to these benefits will be lowered on a sliding scale if you have capital worth between £6,000 and £16,000. Only individuals with a net worth of less than £6,000 will be eligible for the full amount of any means-tested payments. 

As a result, if your child inherits over £6,000, their means-tested benefits will be affected, and the inheritance must be reported to the Department for Work and Pensions (DWP).

Is there anything you can do?

 If a friend or family member dies and leaves an inheritance to your child, they are entitled to it and the sum must be disclosed to the DWP. 

If your child, or someone acting on their behalf, refuses the inheritance, gives it away, or spends it rapidly, the DWP may suspect a purposeful deprivation of assets. In other words, you are not permitted to intentionally lower your capital in order to maintain your eligibility for means-tested benefits. 

There's not much you or your child can do after an inheritance is due to guarantee that their means-tested benefits aren't impacted.

In addition to the influence on your child's benefits, you should evaluate whether your child has the mental competence to manage the inheritance they will get. You may need to apply to the Court of Protection for an order to administer the inheritance on their behalf if they don't have the mental ability to do so.

What can we do now to avoid issues in the future? 

If someone wants to give your child an inheritance, they might consider putting money in a trust instead. A trust can help you offer financial support for your child throughout their life while still protecting their means-tested benefits. A trust can also allow others to handle your child's inheritance.

If you need more information on trusts please let us know.