In some cases, this payment is not counted as savings for one year and will not affect your income related or means tested benefits during this time, such as UC.
However, where benefits have been underpaid because of:
* an official error * an error on point of law
Any payments over £5,000 can be disregarded for the length of the claim or until the award ends.
I know many claimants who receive a large backdate set up funeral plans. You can do what ever with your savings as you please, but remember DWP could treat your spending as Notional Capital.
Gary
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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