ESA and small life insurance policy and home impro

Hi CuriosityCat1

I'm sorry but your question is outside the scope of the forum and we can't advise you on such matters. You need to speak to a specialist benefits adviser.

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BIS

Hi CuriosityCat1,
Firstly, I am sorry to hear that your brother has passed away.
When on means tested benefits such as ESA you can have up to £6,000 in the bank or as other forms of capital such as stocks and shares without there being any reduction on the amount of benefit. You can still continue to receive benefit if you have up go £16,000 of savings or other capital. Over this amount benefits won't be allowed.
If you have between £6000-16,000, then you are deemed to have £1 of income for each £250 over £6000. This basically means that your benefit amount will be deducted by each £1 of this deemed income.
If you spend money such as an inheritance, then you need to be careful that you don't cause what is called deprivation of capital.This was mentioned by Denby. The ethos of means tested benefits is that benefits are provided for those without money, so clearly if you come into a lot of money, you will no longer be eligible for benefits. Basically you have to use your inheritance to live on until you are under the £6000 limit again. Needless to say, there are always people wanting to cheat the system. Such people will go on unnecessary spending trips enjoying expensive holidays and then saying to DWP I haven't got any money now, I should be receiving benefits again. Of course this doesn't seem very fair so the law provides that people who deliberately waste their inheritances in this way.
However, it is also known that people on benefits often don't have very much money to complete essential house repairs, replace broken furniture and white goods, or even a car. Hence as stated by Denby if you have essential repairs to make or items to replace you can pay for this from your inheritance or other recently received capital. Additionally, people have used inheritance money to pay for a holiday, or to perhaps visit relatives who are abroad, and haven't been seen for a long while, or who might be ill. Purchases for disability gadgets or even medical treatment such as physiotherapy etc would probably also be allowed. Expenses need to be reasonable and justifiable.
It is important to keep receipts fir everything spent. Perhaps the roof repairs etc will use up all the inheritance? If so you will want to continue on benefits immediately. If so you will need to show DWP that what you spent was reasonable. Getting quotes us always a good idea for any house repairs, and will show DWP that you have been careful and appropriate in your spending. It would also be a good idea to get a report from the builder saying exactly what needed to be repaired and why and a full break down of the costs.
If DWP believe that you have deliberately wasted money to continue to claim benefit then benefit will be stopped until such time that if you had spent normally your money would fall under the limit.
So, for example, if your reasonable bills etc are say £200 per week. Car, food, petrol etc, school lunches, even things like vet bills and house insurance pro rata are all proper things to pay for. So you have £18000. Each week you pay out £200 on the bills. It will take you 10 weeks to reduce your money by £2000, to bring you within upper limit for benefit of £16000 and much longer to reduce your capital down to under £6000 to get the full amount of benefit again. (These calculations can get very complicated so I have simplified the explanation somewhat .)
The important thing is to keep receipts for everything either to show spending on essential repairs etc or normal daily living expenses as appropriate.
It is important also to inform DWP when you actually get the money to avoid overpayments and potential fraud investigations. There is no need to inform DWP before the money arrives.
I hope this clarifies matters further.
LL26