Property, inheritance & capital disregards

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  • #285126
    MitchellK
    Participant

    Hi,

    I’m hoping someone can help with a rather complex situation.

    We have a resident who has been claiming full HB & CTS with us since 2012. In his original application he mentioned that he had inherited a property, which he was intending to renovate and sell, but the notes are very brief & it seems this point wasn’t especially queried at the time.

    Late last year we received a fraud referral for this customer with an allegation that he jointly owned a property via inheritance, which he was in the process of selling — at that time we had just noted on the claim that as he had declared he had this property back in 2012 no further action was needed beyond following up with him 6 months later to request an update on the progress of the sale…

    We’ve now received another fraud allegation that the customer is deliberately stalling on the house sale because he doesn’t want to lose his benefits. It definitely seems like there’s a family dispute in play over the sale of this house.

    However, now that this claim has come to me I have been doing some very thorough research into this resident & have been able to track down the property address & found Land Registry records confirming it was in fact sold back in December 2015. The customer never informed us of this sale at the time.

    The customer has now provided a letter from 2022 from his solicitor stating that as the joint property owners have not been able to come to an agreement about how to split the proceeds from the property sale, the solicitor is holding these funds on their behalf — until such time as they can either agree on how to share the sale proceeds or a court order is issued regarding this instead. A court case has been set at the RCJ for next month to determine how to split the money.

    To complicate matters further our customer has also been drawing down thousands (over £15k) from his private pension this year & has spent almost all of that money on solicitor & mediation fees relating to this house sale. He has also received over £20k as his share from the sale of inherited possessions (antiques), although again over £16k of this money has also gone on solicitor fees.

    I’ve been reviewing the HB 2006 Reg’s on Capital, particularly Para 49 on ‘notional capital’ & Para 51 ‘capital jointly held’ — https://www.legislation.gov.uk/uksi/2006/213/part/6/crossheading/capital/made & I have several questions about this situation.

    Firstly, my understanding is that where a customer has a second property which is not their normal home then it should be treated as their capital (less 10% of the value & any mortgage held against it) & it can normally only be disregarded for up to 26 weeks?

    Also, re: the capital jointly held point — my reading of the HB Reg’s is that regardless of the actual % split the customer might formally agree with the other joint owners, we would always have to treat it as equally split between all the joint owners (so 50/50 for two owners / 30/30/30 for 3 owners & so on)?

    Finally, that where a ‘claimant and one or more persons are beneficially entitled in possession to any capital asset … the foregoing provisions of this Section shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess’.

    Does this essentially mean that the fact he had joint ownership of this asset meant that we should have been treating him as if he held the actual capital value as notional capital all this time?
    The property was sold for £465k in December 2015.

    Or should we be treating this capital as disregarded on the grounds that the customer hasn’t yet received the money from the sale & the solicitor is holding onto it until the court case has completed next month?

    Also could the thousands of pounds he has been spending on solicitor and mediation fees in relation to this dispute be considered as capital deprivation?

    The individual who contacted us to allege fraud is convinced he is delaying the money from being released because he does not want to lose his state benefits.

    To be honest my take on this is that we should have always taken the fact that they had an inheritance property into account as capital on the claim & certainly at the point the property was sold in 2015 the customer should have declared this and their HB should have been cancelled, as we should have been treating him as though he ‘actually possessed that capital’ even though the monies still haven’t been paid out to him..

    If anyone has any experience with a similar situation I would be very grateful for your thoughts on this.

    Thank you!

    #285127
    peterdelamothe
    Keymaster

    The trouble with a lot of your analysis is that he told you the situation right at the start when the claim was first made so he cannot be said to have misrepresented his situation. Did he fail to report a change in circs? Possibly ….when the house was sold but the counter argument would be that he has yet to receive any funds.

    Any Tribunal Judge would want to know what the Council did when the claim was made? Why was a note / diary entry not made to review the case? It is very difficult to understand why so little was done by the Council. Did the assessor write to say “dont forget to tell us etc!” Was ANY review undertaken in the following years? It is one of the best ways to get a FTT Judges back up to say that the claimant should have done this and that when the Council itself seems to have done very little.

    Any overpayment you decided to create…very reasonable argument that it is all an “official error”.

    So a pragmatic solution would be to decide that HB / CTS will end when the money is actually paid out by the solicitor.

    The monies paid in sols fees…no chance of this being deprivation. He wanted his share of the near half a million pounds. That would end his benefits not increase them.

    #285128
    MitchellK
    Participant

    Hi Peter,

    Thanks very much for your response. That’s very helpful.

    So I guess we just keep an eye on the results of the court case then & end the claim once the monies are paid out.

    Thanks!

    #285129
    John Boxall
    Participant

    Jarndyce V Jarndyce rides again!

    Have you assessed the Drawdown Pension correctly?

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #285130
    MitchellK
    Participant

    Hi John,

    The drawdown pension is a mixture of regular drawdowns (approx. £200 per month) which we already have on the claim as a an OCP income & also larger irregular drawdowns, which he then almost immediately pays out to his solicitors so it doesn’t generally stay in the account for long enough to be treated as excess capital.

    There is a one month period on the bank statements from earlier this year when he held over £26k in his account after a pension drawdown + the monies received from the auctioneer, but then he paid out £16k+ to his solicitor, so the capital value drops down to about £9k again one month later – I was going to £nil the HB & CTS award for that one month period, but I was going to do it as a closed period supersession & then continue the claim as normal after the capital drops back down again.

    I had also asked for a letter from his pension provider to confirm how much he could get each month were he to take the maximum payment available to him — in response to that request he’s just provided a letter from the pension company stating that his chosen retirement date is 27/11/2023, his fund value is approx. £28k & that he needs to contact them to arrange how to take his pension payments.

    Is there anything else you’d recommend I ask him about the pension?

    Just to clarify as well that this is a pension age claim.

    Many thanks for your help!

    • This reply was modified 3 months, 3 weeks ago by MitchellK. Reason: Just to clarify as well that this is a pension age claim
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