Inheritance will hit welfare payments to brother with homeless past
Q&A: Dominic Coyle answers your personal finance questions
Windfall gains can be a double-edged sword to people on benefits. Photograph: Getty Images
My brother has a history of drug abuse and homelessness. For the past few years, he and his girlfriend have been living in an apartment where they are getting rent assistance. He is on a jobseeker’s allowance.
Our mother died some months ago and he is about to inherit a modest amount of money from her estate, about €50,000. How will this affect his situation re: his apartment and benefits?
Mr NB, email
Windfall gains can be a double-edged sword to people on benefits – and also to vulnerable individuals with a history like your brother’s.
There is very little you can do about the latter. A sum of €50,000 can create all sorts of problems for people with a history of struggling to manage their financial affairs, especially if there are complicating factors like drugs, alcohol or gambling involved. But, unless they are a ward of court, or specific provision has been made within the will for the money to be managed of their behalf by way of a trust or other arrangement, the money will be his to manage once the estate has passed probate.
And the bad news for him, and his partner, is that it will also impact on their social welfare payments.
Both the jobseeker’s allowance and the rent supplement, or Housing Assistance Payment, are subject to a means test among other requirements. And part of that test will ascribe a certain weekly income to savings – or capital as the Department of Employment Affairs and Social Protection describes it.
There is a formula for working out how much your brother’s savings will deliver by way of weekly income.
For the first €20,000 of savings, there is deemed to be no weekly income, so any savings up to that figure are ignored by the means test. However, the next €10,000 (between €20,001 and €30,000) is considered to yield €1 of weekly income per €1,000 of savings.
This rises to €2 per €1,000 on savings between €30,001 and €40,000 and to €4 per €1,000 for any savings above €40,000.
In your brother’s case, an inheritance of €50,000 would be considered to deliver €70 a week in income and that sum would be deducted from his jobseeker’s allowance.
Remember, it is incumbent on him to let Welfare know that his circumstances have changed
If he is currently on the maximum payment of €203 per week – with possibly a €134.70 weekly payment for a qualified dependent – that €70 reduction would knock a noticeable hole in his weekly income.
It would also lead to an adjustment in the amount he is considered able to pay under rent supplement or the Housing Assistance Payment programme to which I understand rent assistant payment recipients are being moved on a phased basis – where his current payment could be as low as €30 or €40 a week.
And remember, it is incumbent on him to let Welfare know that his circumstances have changed. I know there is an obvious temptation to say nothing but that is storing up far bigger trouble for the longer term.
Clearly, as his savings diminish, the reduction in his welfare payment will also fall over time.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email email@example.com. This column is a reader service and is not intended to replace professional advice