wills

[mockingbird]

Hi – an 83 year old woman is due to inherit £50,000 from her recently deceased sister. The beneficiary is on benefits. She does not want to inherit at the expense of he benefits; she wants her only son to inherit the £50,000 instead. I was asked my opinion on this scenario recently but I do not know enough law to respond. It would appear they are attempting to bypass the fundamental issues of inheritance and the many taxes which might apply. What would happen should she refuse the inheritance? There are three further beneficiaries. Thank you

[joggerjayne]

She can execute a "Deed of Variation" or "Deed Of Family Arrangement" and redirect the legacy straight to her son.

It's very simple, and should not cost too much.

It has to be filed with the Inland Revenue with 2 years of the date of death.

[sandyRoe]

JJ, could she do that if she was in receipt of 'means tested' benefits?

[murraymints]

careful how you go....she could be deemed as wilfully disposing of assets in order to claim means tested benefits....

[Barmaid]

What JJ says is correct. As long as the Deed is executed within 2 years of death of the original deceased it is read as if it had been included in the deceased's will and is not classed as a disposition by the surviving sister.

[mrs_overall]

At 83 she should stop claiming benefits, have a whale of a time with the cash, then when it runs out, go back to claiming benefits

[sandyRoe]

Do the other beneficiaries need to agree to this?

[Barmaid]

No they don't. The only other person that needs to be a signatory is the executor and that is only necessary if more tax is payable as a result of the variation.

[joggerjayne]

The other beneficiaries don't have to agree, as it does not affect their share.

[murraymints]

if barmaid is accurate then should be ok...but...why?...at 83 she could go wild and do all sorts in her sunset years.....or...give it to me !!! lol...

[joggerjayne]

She could hire The Chippendales for a whole weekend !

[sandyRoe]

We don't know her circumstances. But it doesn't seem right that she can give away money that she might live on and then continue to claim benefits.

[joggerjayne]

That's the Law.

It's not fair, but hey ... the Law makes me drive at 70mph, even when I'm late ...

... and that's really unfair.

[murraymints]

me too JJ ...and...I only want to do 40 !....

[Barmaid]

The DoV route is also a very useful way of saving IHT - and perfectly legal too.

[themas]

The way I see this is that when she signs the Deed she is depriving herself of capital she would otherwise be entitled to. I'm pretty sure that this would be caught by the Deprivation of Capital rules for means tested benefits.

Of course, DWP or the Pension Service might never know she had done this but there is always a risk that she could be found out - & if she is she could even be prosecuted (unlikely but not impossible).

In my view she should not do this or - at the least - she should check with DWP/Pension Service before doing so to get a definite answer on whether it would affect her benefits.

[daverunt]

It's immoral even if it's not illegal.
The sister obviously wanted her to have the money not her nephew. 50k will see her out at no further expense to the taxpayer!
We, the taxpayer, are in effect paying the son 50k.

[New Judge]

I cannot see how it will avoid IHT, Barmaid. Surely IHT is payable on the total estate, regardless of the distribution details (leaving aside the spouse to spouse exemptions). Surely if the value of the will in question exceeds the current limit (£325k) then IHT will be payable. Or am I missing something?

[joggerjayne]

NJ ...

I don't think IHT is an issue ...

It's the question of one beneficiary losing benefits if she inherits.