BENEFITS EXPERT: Can I spend my inheritance?

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I am 71 years old, receiving Pension Credit, Housing Benefit and Council Tax Benefit.

I am due an inheritance of £120,000, so obviously I will lose all my benefits apart from State Pension. I have plans for spending the money but some people have told me that you are not allowed to spend as you wish. Is there any truth in this?

The only circumstances I can think of where the authorities might question a person’s spending is where there is a suspicion that someone has got rid of their assets in order to qualify for State help. If so, the person may be treated as though they still had the money.  

For example, if someone claims a means-tested benefit after having disposed of a large sum of money, they might be asked for details of how it had been spent.

The benefit authorities need to confirm that the person no longer has the money and, if so, to consider why they got rid of it. As long as the person has spent their money in a reasonable way they should have nothing to worry about.

To take another example, when a person has to go into residential care the amount of their capital will have a bearing upon how much they have to pay towards their fees. Sometimes the authorities may need to consider if the person has deliberately deprived themselves of their capital in order to reduce what they have to pay.

This will only be an issue, however, where the person who has disposed of the money must have known that they needed care and support. In other circumstances the money is theirs to use as they wish, without their spending being called into question at some future date.

My husband’s State Pension includes an extra amount that he gets for me. How will his pension be affected if I get a job?

A man who reached pension age before April 6, 2010 could claim an increase in his State Pension in respect of his wife.

This is called an Adult Dependant’s Increase (ADI) and is currently £65.70 a week. However, it cannot be paid if the wife has earnings (including personal or occupation pension) of more than £73.10 a week.

If a woman has a State Pension, based either on her own or her husband’s National Insurance, this is not affected by any earnings or pension she may have.

However, any State Pension she has will be deducted from her husband’s ADI.

Women who reach State Pension age on or after 6 April 2016 will not be entitled to a State Pension based upon their husband’s National Insurance.