Is deed of variation the only option?

Alisonlll

My brother has recently died leaving a sizeable amount of savings he told me how he wanted the money dvided up he told his friends the same and my other brother the same we all know what he wanted but he didn't have time to write it down in a will meaning that my elderly mother is set to inherit the lot.

Mum wants to honour her sons dying wishes and if he had the time to write it down he planned to write a will and there wouldn't be any issue mum is on benefits and she is left with the problem of being seen as depriving herself if she gives the money away to those my brother wanted the money to go to she doesn't feel the money is hers as she knows my brother didn't want her to have all of it

I know she can make a deed of variation but will she risk loosing benefits if she deprives herself of the money that wouldn't of been left to her had my brother written a Will

Loughton_Monkey

Sorry to learn of your loss. I am no legal expert, but my opinion is that the DWP would ignore any deed of variation. The Inheritance Tax people usually accept it OK, but I am sure the DWP would see it as 'deprivation'.

Were they to ignore the inheritance for benefits purposes, it would open the flood gates. And the more you stress [as you have done above] that this was his express wish, the more likely it is to fail. This is on the basis that (a) people would say this wouldn't they?, and (b) if he felt that strongly about it, then surely even a hasty home-made will would have been written.

It might also appear strange why he was so adamant to leave money to everyone other than his own mother who survives on benefits.

moonrakerz

A Deed of Variation varies a Will, if your brother left no Will how can it be varied ?

alanq

moonrakerz wrote: »

A Deed of Variation varies a Will, ...

...but that is not all that it can do.

Deed Of Variation/Variation
"If all of the original beneficiaries agree, an inheritance under a will or under an intestacy can be changed after death."

http://www.hmrc.gov.uk/cto/glossary.htm#variation

jayship

alanq wrote: »

...but that is not all that it can do.

Deed Of Variation/Variation
"If all of the original beneficiaries agree, an inheritance under a will or under an intestacy can be changed after death."

http://www.hmrc.gov.uk/cto/glossary.htm#variation

I remember an article in the Investment Times from HL several months ago and agree with the above quote. It may be worthwhile to ring HL as a prospective customer to get further info or even hmrc

Alisonlll

Loughton_Monkey wrote: »

Sorry to learn of your loss. I am no legal expert, but my opinion is that the DWP would ignore any deed of variation. The Inheritance Tax people usually accept it OK, but I am sure the DWP would see it as 'deprivation'.

Were they to ignore the inheritance for benefits purposes, it would open the flood gates. And the more you stress [as you have done above] that this was his express wish, the more likely it is to fail. This is on the basis that (a) people would say this wouldn't they?, and (b) if he felt that strongly about it, then surely even a hasty home-made will would have been written.

It might also appear strange why he was so adamant to leave money to everyone other than his own mother who survives on benefits.

the issue Im trying to figure out is how we share the money out? I didnt say he wasnt going to leave mum any money only that he didnt want to leave it ALL to her, she is on benefits which will stop but if in the future she is eligible for benefits they may say she isnt because she deprived herself now, My brother wanted those who would benefit most from it to have it ie for me, and my other brother to use it towards deposit for a house, we both have children and partners and it seems ludicrous that Mum on her own to have every last penny and cannt share it out round her children and grand children without being seen to of deprived herself.

Mum is worried about how best to manage this money and the stress on top of loosing a son is not good, my brother wanted to divide the money up to make it more manageable for each of us but also to relieve the pressure from mum who doesnt need/want a large pot of money at this stage in her life.

in answer to the question why didnt he write a will he didnt know he was going to die so suddenly and even the doctors thought he had a few weeks, he had made arrangements to sit down with his friend to write a will but he didnt get out of hospital to do it hindsight is a wonderful thing.

Id like to know how mum can use this money in keeping with what my brother wanted without making problems for herself in the future

we where told by the solicitor that we dont need to have a deed of variation once the money is transferred to mum she can gift it to us but we must be aware that it is liable to be included in any inheritance tax if she died in the next 7 years

SnowMan

Hi alisonlll. Sorry to hear of your loss.

The deprivation of capital rules are very complicated. The rules are set out in the regulations that apply to the individual benefits.

Based on what you have written I think it should be possible to put up a strong defence if the benefit authorities were to try to claim at a future date that deprivation had occurred.

It boils down to, should a query arise to your mother arguing successfully that she would have 'spent' the money in the same way (i.e. applied her son's wishes to redistribute the estate) if there had been no affect on benefit entitlement. In this case I think it is clear that this is the case based on what you say.

Another factor that would go in your mother's favour would be the time that may elapse before benefit entitlement is affected. While there is no time limit as such (after which deprivation can't be applied by the authorities) the longer that period is the harder it is for the benefit authorities to prove that it is deprivation.

If part of the reason for complying with her son's wishes is to increase entitlement (even if the main reason is to follow her son's wishes) then the benefit authorities can argue deprivation has occurred, assuming that the benefit issue affected the decision. However again I don't think that applies here., the sole reason seems to be to comply with her son's wishes.

Personally, and ignoring inheritance issues, a deed of variation would intuitively seem like the best way to do things as it is clearer what is going on and why should the matter come up in the future, i.e. the legal distribution of the estate has been changed to comply with the son's wishes. Perhaps your mother could ask the solicitor for a letter confirming why your mother had requested the deed of variation.

If the benefits authority do try and claim deprivation in the future then your mother should seek specialist advice for example from a Citizens Advice Bureau.

catfish50

Loughton_Monkey wrote: »

It might also appear strange why he was so adamant to leave money to everyone other than his own mother who survives on benefits.

Indeed. Do courts usually accept the word of would-be legatees that the deceased really meant to leave the money to them?

calleyw

I have a feeling that the DWP will see it as deprivation. You say your brother did not have time to make a will because he was in hospital. I know this sounds harsh but the DWP will say tough should have written it when he was well.

From a personal point of view everyone no matter how well or not should have a will. No one knows what is around the corner. But truth of the matter is families can not be trusted after you are gone to carry out your wishes.

If it was as simple as that people would say well fred wanted his money to go to X and Y then everyone would be at it to stay on benefits.

Your mum could come off benefits and once her savings where below the permitted level she could re-claim. I believe this is possibly the only option.

Personally you need to get off the internet and get proper advice. As some of advice here is very close to the edge such as the longer you leave it the harder it is prove deprivation. The DWP can go back as far as they like if they believe deprivation has taken place.

You can talk to the DWP without giving any personal details. And you might need a solictor who is an expert in benefits.

You don't say what benefits you mum is on or how much was left. If on income related benefits you can have up to 6K before effects benefits, over 16K the benefits cease.

All the best.

Yours

Calley

getmore4less

Alisonlll wrote: »

Id like to know how mum can use this money in keeping with what my brother wanted without making problems for herself in the future

we where told by the solicitor that we dont need to have a deed of variation once the money is transferred to mum she can gift it to us but we must be aware that it is liable to be included in any inheritance tax if she died in the next 7 years

Is future IHT really a problem?

Will her estate be over £325k is why is she on benifits?

Did she have a husband(not divorced) that has died leaving a nill-rate band?

If there is for IHT to be an issue we are looking at assets of over £650k don't think mum would need benifits then or worry about future care wth that amount , and there should be plenty to help you with your deposits.

Biggles

Alisonlll wrote: »

we were told by the solicitor that we dont need to have a deed of variation once the money is transferred to mum she can gift it to us but we must be aware that it is liable to be included in any inheritance tax if she died in the next 7 years

What solicitor, you didn't mention one before? What advice has he given on deprivation?

If we are talking such a reasonable sum as makes it worthwhile a) to employ a solicitor and b) for him to make a reference to IHT, the commonsense solution is for her to retain as much as she needs to ensure a reasonable income without being a burden on the state for the rest of her life and to divide the reminder up according to what she thought were her son's wishes.

IHT (which presumably, by the way, must be due on your brother's estate, maybe it was his solicitor?) would only be a real problem in your mother's case if she died in the first three or four years, after that IHT is reduced on a sliding scale until the seventh year.