Disability and inheritance

[PurpleFeather]

A friend of mine is on Disability Allowance and lives with her parents. Her grandmother passed away recently and the estate is to be split between my friend and her two siblings. Ideally they would like to keep the property and have a rental income as this gives her a sense of security in life - however it looks like this would get her cut off her Disability Allowance (DA) entirely as the value of the house would be ~€500,000. Living in the house isn't really an option because she could never afford to pay rent to her siblings and cover bills etc. But her share of the rental income would work out less than her DA so she couldn't afford to be cut off.

It's not a case of not wanting to pay her own way - if she could retain a payment for the difference in rental income vs DA she would be happy with that but from our understanding the rental income isn't assessed as means but the house value is. She's not eligible for Invalidity so that isn't an option. She doesn't have any other property or savings. There is some cash in the estate which would help with the inheritance tax, and one of her siblings is willing to loan her the remainder if the house isn't sold.

If they were to put a studio apartment in the garden for her to live in would it count as her primary residence and then not be assessed as capital means? Or if there's anything else we might be missing that could be helpful, or any recommendations of people to talk to would be great.

 

[Brendan Burgess]

The home you live in is not considered means.

So if she spends her inheritance on buying a house, her Disability Allowance would continue.

Could she live in the house she is inheriting and rent out rooms?

Brendan

 

[dubdub123]

The threshold from grandparent to grandchild is quite low so tax for each grandchild could be aroumd 40k i think (run the numbers and see). That would be quite a burden for a person on DA to take on that amlunt of a loan.
Also depending on the Disability taking responsibility for running a house and looking after tenants or room mates may be a hugh ask.
What is the plan going forward for the home whete they currently live? Will they be left this house?
One option is to sell the property, pay tax due and for the money to be used to improve current main residence and leave 50k savings.

Person with the disability needs to ensure that they are making decisions or being supported to make decisions that long term are sustainable and best for them. It really depends on what they are comfortable taking on.

at the minute it looks like
- stay living with parents, sell inherited property, improve current home, keep 50k savings and keep DA and all.that goes with that (free travel and medical card). No disruption.

- move from parents home into other property and rent out under rent a room at 14k max. Youd need to see how this would work as their portion should not impact DA. They would however be left with large tax bill and probably other loans to improve the property.

 

[Marsupial]

The home you live in is not considered means.

So if she spends her inheritance on buying a house, her Disability Allowance would continue.

Could she live in the house she is inheriting and rent out rooms?

Brendan

I assume that her share of the rental income from the house would be assessed as income so her DA would be reduced - or ended if her rental income exceeded the threshold.

 

[fairy1]

The value of her portion of the house will be assessed as capital, not the rental. Looking at the value of the house she may be over the means test for DA. She would have to be living in the property for it not to be assessed.

he formula for assessing means from capital for Disability Allowance and Carer's Allowance is as follows:

Capital	Weekly means assessed
First €50,000	Nil
Next €10,000	€1 per €1,000
Next €10,000	€2 per €1,000
Balance (any capital over €70,000)	€4 per €1,000

 

[PurpleFeather]

Thanks to all who responded. Living in and renting out the other room wouldn't be ideal for her situation, plus it would increase her expenses with her income staying the same (the rental income would be going to her siblings in that case).

I think buying a property with the inheritance might be a stretch - she would need to live near family and her healthcare providers and resources and cost wise that is probably unrealistic, plus her expenses would increase if living alone.

The parents home will likely be split amongst the three siblings when the time comes but the parents are in good health and that time is likely quite far away.

As fairy1 said it's the capital that's assessed for DA not the rental income. Unfortunate and doesn't make much sense to me, surely it would be a better system to use the rental income as means and allow people to start partially supporting themselves. I imagine where this situation arises most people sell and quickly dispose of the money on whatever they can so as not to lose their benefit, which seems counterintuitive to saving money for the state.

Selling is probably going to be the realistic option, which we thought was probably the case but wanted to be sure we weren't missing anything. Thanks again everyone.