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Will my son lose his benefits if he buys a house with his inheritance?

Q: My son, who receives benefits and is unable to work, is about to receive a sizeable cash inheritance.

With my help he will be able to purchase a house outright for his family.

Will he lose his benefits? If he does, and uses all the inheritance to purchase the property would he be entitled to receive benefits again while he remains medically unfit to work?

A: From what you have said, I assume that your son is receiving Disability Living Allowance (DLA) and Employment and Support Allowance (ESA).

DLA is a non means tested benefit and is not affected by the level of a disabled person’s savings.

Similarly, contributory based ESA is non means tested. Instead, eligibility is based on the level of national insurance contributions paid in previous relevant tax years.

Contributory based ESA is only payable for a maximum period of 12 months unless you are placed in the support group of ESA claimants.

As your son has a partner, it is more likely that he is either being paid contributory based ESA ‘topped up’ by income based ESA, or just income based ESA alone.

Income based ESA is means tested and most forms of income and savings (capital) are taken into account in calculating entitlement to it.

In common with other means tested benefits, income based ESA has a lower capital limit and an upper capital limit.

The lower capital limit is £6 thousand and for every £250 (or part of £250) you have above this you are presumed to have income of £1 per week.

The upper capital limit is £16 thousand. Any income based ESA your son receives would stop if his inheritance is above this amount.

If someone’s capital is reduced to below this figure through expenditure then they can make a new claim for benefit.

But the DWP can treat someone as still possessing any spent savings if they are deemed to have been spent to secure entitlement to a means tested benefit.

This ‘deprivation of capital’ rule can be applied if securing benefit entitlement is not just the sole purpose of expenditure but a significant motive.

Decisions as to whether someone has deprived themselves of capital should be based on the individual facts and situation of each case and involve looking at what has been bought and when and why it was bought.

It is possible to appeal a decision refusing or reducing benefit on the grounds of deprivation of capital.

I would recommend that your son and yourself seek advice before making a large outlay on a property. Disability Rights UK has a factsheet on sources of help.

·Ken Butler, Disability Rights UK

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