Beneficiary rejects gift in will

growler834 · 27 March 2017 at 4:08PM

My widowed, childless, uncle has recently died and my brother & I are his executors as per his will. He left his estate, which falls well below IHT limit, to be divided between myself, my brother and my elderly father. My father has decided he has no need of the cash and he wishes it to go to his two adult grandchildren (my uncle's great niece & nephew).

Can my father make a disclaimer & then would we have to make a variation of the will to include my niece & nephew? He doesn't want to accept the legacy & then give it to them as I'm assuming it could leave him open to the question of 'deprivation of assets' in the future, should he need to go in a care home (my father owns his modest home, has a small amount of savings & is not on benefits).

The will is very straightforward so we are happy to do it ourselves, however we are seeing a solicitor this week regarding conveyancing & I wanted to understand where we stood in case we need their help. Thanks for any advice.

p00hsticks · 27 March 2017 at 4:17PM

growler834 wrote: »

Can my father make a disclaimer & then would we have to make a variation of the will to include my niece & nephew? He doesn't want to accept the legacy & then give it to them as I'm assuming it could leave him open to the question of 'deprivation of assets' in the future, should he need to go in a care home (my father owns his modest home, has a small amount of savings & is not on benefits).

I'm not an expert, but my understanding is that you can't really get round it now - varying the will to avoid receiving the lagacy still requires him to agree to giving away money he is entitled to and so if he did need to go into care in the foreseeable future it could be looked upon as deprivation of assets.

zagfles · 27 March 2017 at 4:32PM

If he's currently fit and healthy and there's no particular reason he thinks he may need a care home in the future, then it's not "deprivation" even he inherits and give the money away!

It would be ridiculous if people couldn't spend their own money just in case, at some point in the future, they may need benefits. It's only "deprivation" if the need was forseeable (not just a possibility). See Age UK's guide:

http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

The local authority must show that you knew that you would need care and support and that you have reduced your assets in order to reduce the contribution you are asked to make towards the cost
[...]
The statutory guidance confirms it would be unreasonable to decide you have disposed of an asset to reduce the level of care charges if, at the time the disposal took place, you were fit and healthy and could not have foreseen the need for care and support.

getmore4less · 27 March 2017 at 4:49PM

Executors don't make variation beneficiaries are the one that do them.

if your dad disclaims then he is treated as if he died just before the testator

It will depend on the exact wording of the will what happens to your fathers share if he disclaims.

it could get redistributed(accrue by others) or fall into the residual and depending or become partial intestate if no residual.

variations are just tax friendly gifts by a beneficiary so depending on how much and who is/are the beneficiary any DOV to redirect to those grandchildren could be a waste of money.

Keep_pedalling · 27 March 2017 at 5:00PM

The main reason for a using a deed of variation is to make sure his inheritance never hits his estate as far as IHT is concerned.

It does not provide protection against DoA or in maintaining means tested benefits, but the OPs father already has assets that could pay for care if ever needed, and is not on benefits so I see no problem here.

securityguy · 27 March 2017 at 7:05PM

growler834 wrote: »

He doesn't want to accept the legacy & then give it to them as I'm assuming it could leave him open to the question of 'deprivation of assets' in the future, should he need to go in a care home (my father owns his modest home, has a small amount of savings & is not on benefits).
.

I'm afraid this is multi-dimensionally wrong.

Firstly, any mechanism by which you decline an inheritance is deprivation of assets if (vide infra) deprivation of assets arises. Whether you accept it and give it away, decline it or use a deed of variation, then if DoA arises, the means by which you reduced your potential assets is irrelevant: it's the intent of the transaction which matters.

However, DoA only arises if the requirement for state funded care is imminent (ie, it's not enough just to be over 70, you need to have an impending and obvious need for care) and the transaction is entirely or primarily intended to maintain entitlement to funding and it reduces your income or assets below a reasonable level for your plausible needs. Those are high thresholds, as they should be: otherwise, spending fifty quid in Waitrose when you are 35 rather than thirty quid in Lidl and saving the twenty could be regarded as a DoA for your future care.

For widowers who own houses, it is hard to see how they could do anything with their cash or other assets which could reasonably be deemed to be deprivation of assets. If they are not currently on the point of going into care, then their house constitutes a reasonable buffer against plausible care costs, and it would be entirely unreasonable to expect them to play silly games with other capital "just in case".

Other posters link to good advice.

growler834 · 27 March 2017 at 7:47PM

Thank you to everyone for your advice. I think, considering everything said, that the best way to go is for my father to accept his inheritance & then give it to his grandchildren. As he is fit & healthy for his age, and he owns his home & has some savings, he is already best placed for self funding any care that, hopefully, won't be required in the future.

securityguy · 27 March 2017 at 8:33PM

If your father's estate might be liable for IHT, you should use a deed of variation to do this. Otherwise if he dies in the next seven years the money he gave away will be part of the total for the calculation of IHT.

growler834 · 28 March 2017 at 9:09AM

Hi securityguy, my father's estate is nowhere near the IHT figure so his decision will have no tax implications.

Beneficiary rejects gift in will

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