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Last updated:
19/10/2018

What if my relative inherits a lump sum?

  1. Overview
  2. How do I make a will?
  3. What if my relative inherits a lump sum?
  4. What are discretionary trusts?
  5. Who specialises in trusts and mental illness?
  6. How can I find a solicitor?
  7. Next Steps

You may be worried about your relative’s ability to handle a lump sum of money. 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,
  • It would affect their benefits, or
  • It would make them have to pay for social care or a care home.

Generally, you are free to make a will in the terms you think best. However, in Scotland if your relative with mental illness is your child or spouse, the law gives him or her the right to claim a part of your estate after your death. This is called ‘legal rights’. If you are likely to be leaving money, stocks and shares or other items in your will, you need to consider the effect of legal rights.

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,
  • Council Tax Support, or
  • Housing Benefit.

These benefits are affected by any income, savings or other assets that your relative gets. If they have over:

  • £6,000 in savings, their benefits will be affected, and
  • £16,000 will mean that they can't get means-tested benefits

An inheritance paid as a lump sum would become part of your relative’s savings. This means a lump sum might lead their benefits to be reduced. 

An inheritance paid as a lump sum would become part of your relative’s savings. This means a lump sum might lead their benefits to be reduced.

Other benefits are not affected by income, savings or other assets under the current benefits rules. These are called ‘non means-tested’. They include:

  • Disability Living Allowance,
  • Personal Independence Payment,
  • Contribution-Based Employment and Support Allowance (CB ESA).

CB ESA only lasts for 12 months if you are in the work related activity group. There is no time limit if you are in the support group.

If you want further advice on welfare benefits you can contact Citizens Advice. If you want face-to-face advice their website will tell you your local office. Or you can call them and ask:

Citizens Advice

Give free, independent, about your rights and responsibilities.

Telephone: 0808 800 9060

Website: www.citzensadvice.org.uk/scotland

Care homes and social care services

Having savings could mean that your relative would have to pay costs if they live in a care home or get social care services. If you want more advice on this you can contact your local council.

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Within this subject

  1. Overview
  2. How do I make a will?
  3. What if my relative inherits a lump sum?
  4. What are discretionary trusts?
  5. Who specialises in trusts and mental illness?
  6. How can I find a solicitor?
  7. Next Steps
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