What if my relative inherits a lump sum?
You may be worried about your relative’s ability to handle a lump sum of money, and you might wonder whether:
- They would spend the money quickly rather than making it last,
- They would not spend it wisely,
- They would give the money away or be too vulnerable to look after the money properly,
- It would affect their benefits, and
- It would make them have to pay for social care or a care home.
Effect on benefits
Your relative might be claiming benefits because of a low income. These are called ‘means-tested benefits’ and they include:
- Income-Related Employment and Support Allowance,
- Income-Based Jobseeker’s Allowance,
- Universal Credit,
- Income Support,
- Rate Relief, and
- Housing Benefit.
Inheritance paid as a lump sum would become part of your relative’s savings, which means that a lump sum might lead their benefits to be reduced.
These benefits are affected by any income, savings or other assets that your relative gets – this means that if they have over £6,000 in savings, their benefits will be affected, and if they have £16,000 it will mean that they cannot get means-tested benefits. Inheritance paid as a lump sum would become part of your relative’s savings, which means that a lump sum might lead their benefits to be reduced.
Effect on care homes charges
Having savings could mean that your relative would have to pay costs if they live in a care home. You can find more about this on the How do I pay for residential care? page.