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Jo C.
Jo C., Barrister
Category: Law
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Experience:  Over 5 years in practice
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I am working part time and soon will inherit 40 000.

Resolved Question:

Hello
I am working part time and soon will inherit 40 000.
As its stands I could use the money to help pay towards a small mortgage to buy my council flat.
I get working tax credits so only the interest accumulated from the inheritance is taken into consideration for benefit purposes. Therefore if I exercise my right to buy I doubt very much this would be seen has deprivation of capital.
However if I were to wait for Universal Credit to kick in I probably would have to supplement my part time income with my inheritance. I would lose my right to Universal Credit because of having capital over 40000.
Apparently if I have begun proceedings to possess my home the money can be ring fenced to have a deposit to but my flat.
My questions are at what point would I be seen to have begun proceedings to possess my flat. Would that start from puttiing in my right to buy or later when I have started legal proceedings.
If I do use the inheritance for right to buy would this be seen has deprivation of capital ?
Submitted: 2 years ago.
Category: Law
Expert:  Jo C. replied 2 years ago.
Hi.
Thank you for your question. My name is ***** ***** I will try to help with this.
I presume you don't currently receive housing benefit as well?
You fully cover the cost of rent?
Customer: replied 2 years ago.
Good Evening
At present I am a retired civil servant and I receive ESA and DLA and full Housing Benefit and council tax reduction.
If I go back to work part time I will have my income supplemented by working tax credits . I will lose my ESA but will keep my DLA which is an indefinate award. I am aware that my DLA award will change when I am reassessed for pip.
I do not have the inheritance yet and wont until my mothers bungalow is sold.
Customer: replied 2 years ago.
If I stay the way that I am and do not return to work I am aware that I will keep my contribution ESA and my DLA but will lose HB and probably CTB and income related ESA . My full benefits will not be returned until my inheriatnce has dwindled down to 6000.
Customer: replied 2 years ago.
It was too late to put my share of the sale into a trust because my mothers health rapidly got worse before she sadly passed away.
Customer: replied 2 years ago.
I don' t mind living off whatever benefits I have left and my inheritance but this seems such a waste. My mother and father worked hard for whatever money they had.That's what prompted me to try and get a job so that I could use the money in a way that would respect their legacy.
Customer: replied 2 years ago.
I will be working 4 hours per day and this takes in to consideration what I may be able to manage with my condition.
Expert:  Jo C. replied 2 years ago.
Yes, I do think you are right. If you exercise a right to buy they are not going to argue that is capital deprivation. At the moment housing benefit would be a greater sum in the long run.
Universal credit would probably be affected though. As you would no longer be on housing benefit there is a risk that they could argue that it amounts to deprivation. However, I think overall you would probably succeed on that point. Truth is that we don't really know how they will argue that yet because it is not in force but their own guidance does say that they would disregard amounts earmarked for house purchases amongst other things like funeral or care plans.
Moreover the guidance goes on to say that a person is not to be treated as having deprived themselves of assets if they repay debt or make other sensible purchases of goods or services. There isn't a definition of sensible purchases but one can but deduce that it applies to house purchases that do not exceed the needs of the claimant.
Obviously you do take a risk because of the changeover and the uncertainty over how it will be applied but it is a fairly low risk.
Time should run from the date of the application though.
Can I clarify anything for you?
Jo
Customer: replied 2 years ago.
So basically at the point of applying for my right to buy and receiving a purchase price I could apply to have money ring fenced for the purchase.
Expert:  Jo C. replied 2 years ago.
Yes, even under the old policy. Under the new it looks as though that would make no difference anyway.
Customer: replied 2 years ago.
I would imagine I have to have some proof that I have agreed to go for it.
Customer: replied 2 years ago.
So if I sign the form that says I agree to go ahead with the right to buy and send them a copy of this - would that be enough to ring fence the money to purchase the property.
Expert:  Jo C. replied 2 years ago.
Yes, but they can give you that.
There will be a paper trail even arising from your application to use your right to buy.
At this stage you don't have the money anyway.
Customer: replied 2 years ago.
As part of Universal credit there is a housing component so I would imagine if I do buy my flat it will be saving them paying me this.
The situation might be ( with the changes to come ) that I am on a part time wage and receive my inheritance and at that point will lose my Universal Tax credits because I am over the 16000 limit. So I would then be living on my part time wage and inheritance.
If I then choose to use the money to excercise my right to buy would this be seen has depriving myself of capital and after purchasing my flat would my Universal Tax credits be re-instated.
Customer: replied 2 years ago.
I am aware that I do not have the money yet - but I could soon.
Customer: replied 2 years ago.
I do apologise - . I meant say if I was working part time . Typing error - sorry .
Expert:  Jo C. replied 2 years ago.
Yes, that is exactly right. That is why it would be ring fenced
I don't think it would be considered deprivation of assets if you bought your property for the reasons above.
Customer: replied 2 years ago.
Just to clarify what are my reasons you are considering here
Expert:  Jo C. replied 2 years ago.
As you would no longer be on housing benefit there is a risk that they could argue that it amounts to deprivation. However, I think overall you would probably succeed on that point. Truth is that we don't really know how they will argue that yet because it is not in force but their own guidance does say that they would disregard amounts earmarked for house purchases amongst other things like funeral or care plans.
Moreover the guidance goes on to say that a person is not to be treated as having deprived themselves of assets if they repay debt or make other sensible purchases of goods or services. There isn't a definition of sensible purchases but one can but deduce that it applies to house purchases that do not exceed the needs of the claimant.
Customer: replied 2 years ago.
Its so precarious - but I am proud that I have been offered a job and may be able to use my inheritance to buy my council flat,
As it stands the flat is worth 176000. They would take off a 103000 discount. So in theory after I have paid off my debts I would only have to get a relatively small mortgage.
However If I apply for a mortgage at the point of losing my Universal Tax credits only my DLA or PIP will be taken in to consideration . I suppose once the inheritance is ring fenced I could apply for U.C before applying for a mortgage?
Expert:  Jo C. replied 2 years ago.
It is but only because there is a change over.
If you repaid debts or bought a property that is not in excess of your needs I really don't think they would say that amounts to a deprivation of assets
That is a sensible purchase.
Your DLA would be ring fenced anyway. UTC is not obviously but it is not designed to ensure you can't have a mortgage.
Customer: replied 2 years ago.
So whilst I was working part time and receiving UC and then received my inheritance my UC would be taken away.?
But then if I applied for my right to buy and ring fenced my inheritnce for the purchase I could then probably get my UC reinstated?
Expert:  Jo C. replied 2 years ago.
Not if it is ring fenced because you have already applied for the right to buy. I would do that first.
Customer: replied 2 years ago.
So I have to apply for the right to buy before I receive my inheritance.
This may not be possible -what might happen then?
Customer: replied 2 years ago.
I know I would lose my UC.
Expert:  Jo C. replied 2 years ago.
Well, then you could lose Universal Credit for a short time until it is reinstated.
Customer: replied 2 years ago.
Ok thank you - sorry for sounding stupid - and chances are it would be reinstated shotrly after ring fencing the deposit.
Expert:  Jo C. replied 2 years ago.
You are not sounding stupid. Nothing is ever terribly quick with the DWP but I don't think there would be unreasonable delay.
Customer: replied 2 years ago.
I believe my right to buy once I have applied for it can stay open for a certain period of time - before I choose to excercise it but not sure how long this is ? It may be 6 weeks or 6 months /
Customer: replied 2 years ago.
Thank you Jo. My mother told me not to worry and just enjoy the money until it was gone.
I may be going back to work too early after being retired for so long.
I do realize that if I stay the way that I am the DWP will be making sure whatever I spend the money on is for reasonable expenses.
Customer: replied 2 years ago.
At least I have explored the going back to work option - but it just seems so precarious.
Expert:  Jo C. replied 2 years ago.
Yes, but this is a reasonable expense under this law and the new.
It is 12 weeks of receiving the offer.
Customer: replied 2 years ago.
Thank you for your advice - it looks like I will be ok - the information you have sent has been insightful.
Are there any links you could suggest to read up on things?
Expert:  Jo C. replied 2 years ago.
Have a look here
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221579/uc-draft-regs-2012-memorandum.pdf
Customer: replied 2 years ago.
Thank you - just to clarify - before I go and thank you again for your advice- what are you referring to when you say youdon't think it would be considered deprivation of assets if you bought your property for the reasons above. Also what is meant by reasonable for my needs - I have a one bed flat so I would imagine it is reasonable.
Expert:  Jo C. replied 2 years ago.
Yes, that is reasonable. They might object if you had lots of spare bedrooms but you don't.
Customer: replied 2 years ago.
Yes of course . Sorry can you just remind me why my reasons for buying my flat would not be seen has depravation of capital - i mean i would be hopefully doing it for long term security
Customer: replied 2 years ago.
what did you pick up on previously?
Customer: replied 2 years ago.
Just trying to clarify
Customer: replied 2 years ago.
Perhaps I shouldnt be asking that again
Expert:  Jo C. replied 2 years ago.
Truth is that we don't really know how they will argue that yet because it is not in force but their own guidance does say that they would disregard amounts earmarked for house purchases amongst other things like funeral or care plans.
Moreover the guidance goes on to say that a person is not to be treated as having deprived themselves of assets if they repay debt or make other sensible purchases of goods or services. There isn't a definition of sensible purchases but one can but deduce that it applies to house purchases that do not exceed the needs of the claimant.
Customer: replied 2 years ago.
Thank you Jo
Customer: replied 2 years ago.
I am sorry about my spelling and typo errors . I was trying to type fast. I appreciate your help.
I wish you a very good evening ,
What do I do now to finish .
Customer: replied 2 years ago.
Sorry one more thing would it be reasonable to pay credit card debt off.
Customer: replied 2 years ago.
I will wish you good night after that question- sorry.
Customer: replied 2 years ago.
How do we end the conversation . I will submit you five stars.
Expert:  Jo C. replied 2 years ago.
Yes repayment of debt is a specific category.
No problem and all the best.
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