Providing for someone who is on means tested benefits
If one of the beneficiaries of your will is on means tested benefits simply leaving the inheritance directly to them could have a detrimental affect on their finances.
If an individual has capital of over £16,000 then they will not be entitled to receive various means tested benefits eg universal credit, pension credit and income support. Capital between £10,000 and £16,000 means the benefits are tapered and capital below £10,000 is disregarded.
This means that anyone receiving a legacy or a share of the estate could lose their benefits. They would have to spend the inheritance until their capital reached the required figure again. The true beneficiary of the will is therefore the Department of Work and Pensions.
To prevent this unfortunate series of events consider establishing a trust in your will for the beneficiary concerned. You would need to appoint trustees to manage the trust. The inheritance would be ringfenced and capital sums can be paid over to the beneficiary but ensuring that at all times their capital did not go above £10,000. That way they can continue to receive their benefits. The money from the trust would then last longer and can be used for things like holidays and making their life better.
If you would like to know more about trusts and how they can work for you why not come to one of my free seminars or contact me for an appointment.
