People work hard throughout their lives to accumulate assets and wealth to hopefully offer them a comfortable retirement. Similarly, many people hope to pass on their wealth through inheritance after they die.
Whilst this gift is offered with care in the hope of providing their loved ones with a bit more comfort, for some it can create a negative impact.
In particular, those receiving state benefits can lose their entitlement because of the inheritance they receive.
Worried that the inheritance received from her deceased mother would impact her benefit entitlement, Lorna Overington hid her £100,000 windfall from the state.
The £100,000 inheritance was then used to fund a luxury family holiday to Florida and provide gifts of £10,000 to her son and daughter.
After discovering the inheritance, Lorna Overington, an ambulance administrator from London, was forced to plead guilty to benefit fraud between the years of 2014 and 2017.
Overington was sentenced to fourteen weeks in prison which was suspended for two years. Additionally, she has been ordered to repay £19,000.
Following her divorce, Lorna Overington began claiming housing benefit and continued the claim even after she inherited a £400,000 property from her mother in New Malden and inheritance payments worth £100,000.
Whilst there are allowances of savings a person may have before benefits are stopped, receiving an inheritance over £16,000 could invalidate a claim or significantly reduce the amount a claimant receives.
The gift offered by the donor, intended to improve their loved ones life, could actually force them to use it as a way of supplementing their lost income. In actual fact, the inheritance is used as a substitute to benefits and reduces the positive impact it was intended to create.
Should an inheritance that includes property and non-monetary assets impact a person’s benefit claim? Is this system fair of does it need amending?
4 Responses
Yes – a property worth £400,000 could be lived in, or sold and the money used to buy somewhere else and remove the need for housing benefit, or let to produce an income of roughly £16,000 before tax. If she was sole heir and wanted to pass on some of the inheritance directly to her children, reducing her own entitlement, she could have done this via a deed of variation.
The testator could have left it to a discretionary trust thus removing any claim on it by the state
Absolutely they should loose benefits….benefits paid for by tax payers who haven’t been left money. Why should I as a tax payer, be supporting someone with a massive bequest.?
A total inheritance of approximately half a million pounds is a very substantial windfall. This particular case smacks of greed. I do think that the way the DWP calculate whether that money was squandered is wring though. They expect the money to be spent at the same rate any benefit payment would be,which is not realistic, even if you use it to pay off debts to reduce interest payments, it’s regarded as wasting the capital. The system should make some allowance for the way it’s spent, perhaps at the rate of the mean wage ? Please remember that benefit fraud losses are relatively low, in fact lower than the figure lost to error.
If the system was more realistic, I’m sure there would be less temptation to commit fraud in the first place.