Inheritance from parents whilst on state welfare, is income affected?

Basically I had to go on disability a number of years ago for an unforeseen condition.

I'm am forced to consider the possibility I may have to remain on disability indefinitely, though remain hopeful that won't be the case.

However my parents are older now and have began to discuss inherence.

I haven't been in a position to accumulate savings. I like week to week on Irish state disability allowance and avail of housing assistance payments.
So the state takes care of all my bills. Which is wonderful of course as I'm mostly incapacitated most/all of the time and have no means to provide for myself.

I understand that if I were to inherit a part of my parents property valued at over 50 thousand, it would impact my weekly allowance.
As the inherence increases, allowance decreases.

What this means is that I would basically have to slowly burn through any inheritance until my own personal net worth is low enough to receive state benefits again.

Is this correct?

My goal was, in the event of making a recovery (and progress has been made so I'm sincerely hoping that will continue and I will rejoin functioning society), that I would have enough to return to university and establish a career.

Or just have enough money to get myself off the ground from a place of having no savings or no assets or sense of personal financial security.

Is there any way to manage this situation? That if I inherit a property that I can actually use it further my life position, instead of it simply replacing state benefits I am currently receiving to survive?

Disability allowance is means tested, yes.

Your home is excluded from the means test.

So, if your parents left you a property in which you lived, your Disability Allowance or Invalidity Pension would not be affected.

Or if they left you money and you bought a house, they wouldn't be affected either.

But if you have cash, it would be means tested.

Brendan

This is how I think it works. But I am not sure of the intricacies.



Say, they leave you €100,000

€50,000 = no reduction
€10,000 = €10 per week reduction
€10,000 = €20 per week reduction
€30,000 = €120 per week reduction
Total reduction: €150 per week

So, if you are getting the €208 per week before the means test, it will be reduced to €58 per week.

If you have €114,500 , the additional €14,500 will result in a further reduction of €58 per week, so you will get nothing.

Brendan

If your parents bequeath you a house that won't impact your allowances but you may get a CAT bill if the house is worth over €335k that you probably won't have the cash to pay.

So I would have to liquidate the inheritance, live off that until it's down to nothing, then re-apply for disability, if I were to be disabled indefinitely?

If they leave you €150,000 in cash you'll lose your full disability allowance, and your HAP will be affected too.

Whereas, ironically, if they bought a small apartment or house (or camper van or yacht!) for you to live in and left it to you, as well as leaving you €50,000 in cash, your means wouldn't be affected at all for the DA payment!

BrokeBroker said:

So I would have to liquidate the inheritance, live off that until it's down to nothing, then re-apply for disability, if I were to be disabled indefinitely?

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In this circumstances it makes sense to put all of your wealth into the house you live in, even trading up if need be. You could also opt to buy a new car that would serve your needs for 10+ years.

BrokeBroker said:

So I would have to liquidate the inheritance, live off that until it's down to nothing, then re-apply for disability, if I were to be disabled indefinitely?

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Live off it until it's down to €113,900, at which point your eligibility for DA will recommence - but only at the lowest level (currently €3 p/w).

NoRegretsCoyote said:

In this circumstances it makes sense to put all of your wealth into the house you live in, even trading up if need be. You could also opt to buy a new car that would serve your needs for 10+ years.

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Meaning, making upgrades until there's no appreciable means remaining to effect DA?

It seems my option is primarily, spend everything to the point it won't effect state payments.

I have two siblings. Perhaps if my parents willed everything to them, i.e. they kind of, "hold my share for me" so the inheritance is not in my name, that would preclude reduction/cessation of DA/HAP?

If the latter were the case, I'm sure there's some other issues there like the money would come under additional inheritance tax?


Just to be clear, I'm not trying to score additional payments, I just want security for my future so I'll have the means to provide for myself day to day, whilst having the option to invest in some kind of a future such as education.

Groucho said:

If they leave you €150,000 in cash you'll lose your full disability allowance, and your HAP will be affected too.

Whereas, ironically, if they bought a camper van costing €100,000 and left it to you, as well as leaving you €50,000 in cash, your means wouldn't be affected at all for the DA payment - and, unless a camper van is regarded as accommodation, - neither would your HAP!

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As I understand, whether the inheritance was cash or non-liquid, the state regards it as the same.

So even if I were left an entire property worth 150 thousand, in the eyes of the state that's 150 thousand in cash = DA payment cessation.

And I would no longer be eligible for HAP payments having a property in my name.

BrokeBroker said:

I have two siblings. Perhaps if my parents willed everything to them, i.e. they kind of, "hold my share for me" so the inheritance is not in my name, that would preclude reduction/cessation of DA/HAP?

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Don't go near this option. There are all sorts of tax and trust issues involved.

BrokeBroker said:

So even if I were left an entire property worth 150 thousand, in the eyes of the state that's 150 thousand in cash = DA payment cessation.

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Not at all. You can own and live in a palace and it is disregarded for DA purposes. Financial and non-financial wealth are treated very differently for means testing purposes.

BrokeBroker said:

And I would no longer be eligible for HAP payments having a property in my name.

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Not necessarily. It would need to be in your sole name and suitable for habitation.

BrokeBroker said:

even if I were left an entire property worth 150 thousand, in the eyes of the state that's 150 thousand in cash

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Just to be clear about this in case you are not so clear.

If your parents leave you a house and you live in it as your home, it is disregarded completely for means test purposes.

So if your parents have an investment property worth €150k and a home worth €300k, they should leave you the investment property and, if you live in it as your home, you will continue to get the full Disability Allowance.

If they leave you a property and you rent it out, then it will affect your means test.

Brendan

BrokeBroker said:

Meaning, making upgrades until there's no appreciable means remaining to effect DA?

It seems my option is primarily, spend everything to the point it won't effect state payments.

I have two siblings. Perhaps if my parents willed everything to them, i.e. they kind of, "hold my share for me" so the inheritance is not in my name, that would preclude reduction/cessation of DA/HAP?

If the latter were the case, I'm sure there's some other issues there like the money would come under additional inheritance tax?


Just to be clear, I'm not trying to score additional payments, I just want security for my future so I'll have the means to provide for myself day to day, whilst having the option to invest in some kind of a future such as education.

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Your parents could set up a trust which would come into effect on their demise.
This will not affect your entitlements and your siblings could be the trustees.
Its also very tax efficient where the individual is deemed to be 'unable to living financially dependently from their own income'.
Book of parental wishes can be included in the trust.
Care needed as its not just DA that would be effected e.g. means for medical card far lower, travel pass, hardship scheme, fuel, rent allowances.
There are excellent free live webinars out there presented by very genuine individuals not sure if I can recommend one on this site ?
They also offer one on one session for c 100e but one would prob get more in return as not everyone is aware of their full entitlements.

Parents could also set up a "Section 72" life insurance policy. This would basically pay your inheritance tax bill for you. It's not cheap but might solve your problem.

A trust fund would be ideal.

This is a very interesting topic and Im looking at this from a parental viewpoint myself. I did have an initial consult on the area of creating my will with this in mind, and I need to pick this back up again as priority but "will trust" seems to be good option with the trust being set up after I pass away. I think called discretionary trust. I need to arrange executors, trustees also.

OP, i think its a very smart move to look into this now and prepare ahead. I would hope to leave my own son in a good position and not affecting his entitlements.

Would appreciate if you can post updates as you gather more info. Thank you

peggy14 said:

Your parents could set up a trust which would come into effect on their demise.
This will not affect your entitlements and your siblings could be the trustees.
Its also very tax efficient where the individual is deemed to be 'unable to living financially dependently from their own income'.
Book of parental wishes can be included in the trust.
Care needed as its not just DA that would be effected e.g. means for medical card far lower, travel pass, hardship scheme, fuel, rent allowances.
There are excellent free live webinars out there presented by very genuine individuals not sure if I can recommend one on this site ?
They also offer one on one session for c 100e but one would prob get more in return as not everyone is aware of their full entitlements.

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A trust, I'm curious how that would manage something like a house/property?

It's far more probable that one of my siblings would end up living in my parents house, or that it would be sold.

I certainly wouldn't end up living there.

So one of the above being the case, how would a trust basically negotiate that such that it doesn't affect my current setup - which as above does include a travel pass, medical card, fuel/rent allowance, etc.

Perhaps there's a trust institution of sorts I could discuss this with?

Having been mentioned twice, it seems to be a potentially viable possibility.

BrokeBroker said:

So one of the above being the case, how would a trust basically negotiate that such that it doesn't affect my current setup - which as above does include a travel pass, medical card, fuel/rent allowance, etc.

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Have you considered the possibility of receiving a generous inheritance and paying your own way for a bit?

NoRegretsCoyote said:

Parents could also set up a "Section 72" life insurance policy. This would basically pay your inheritance tax bill for you. It's not cheap but might solve your problem.

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I will look into this but, curious how it would effect means testing for disability allowance?

It pays off the inheritance tax.

How would I possibly be in a position to pay this off myself?

I live week to week on the DA income. 33% on a property?

Would the state really expect me to acquire this money somehow?

How is that realistic?

Sell my share in the property and use it to pay the inheritance tax?

Then still have the remaining liquid amount of the inheritance, have my weekly income reduced/cut-off until I burn through that and am back to square-one?