Deprivation of assets - inheritance

allthatmularky

Hi just looking for some advice on this situation. I'm not sure if the rules for deprivation of assets needs to considered in this situation or not.

Briefly the situation is as follows - an aunt of mine has died and left one of her brothers the whole of his estate, there are two other surviving brothers. The intention is that once the estate is realised that the money will be split three ways between the surviving brothers.

The brother who is the beneficiary is single and has no family while the other two brothers have family - the other two brothers both are receiving care. One paying for his own care and the other has it state funded. However, both brothers intend to pass on their inheritance to their families immediately they receive it.I'm concerned that they would be able to do this without the state crying foul.

They argue that this was the intention behind the will that the nephew/nieces were always the intended beneficiaries and they don't see any reason not to give this money away.

I'm unfamiliar with the rules on deprivation of assets regarding care and care homes and would be grateful for some advice.
One solution that has been suggested is that the brother who is the sole beneficiary gift the money straight to the nieces and nephews.

HB58

I think you are right to be concerned as this clearly looks like DOA. I don't see anything wrong with your suggestion that the money should go straight to the next generation.

xylophone

The sole beneficiary could consider a Deed of Variation that would pass the desired amounts to the nieces and nephews?
If the sole beneficiary received the money ,then gave it to the other brothers, then they gave it away as described, then there could indeed be problems?

(1) For the beneficiary brother, he would be regarded as giving away his own money, so that there could be IHT considerations for him - (2) for the brothers receiving and giving there could be both DOC and IHT considerations?

The sole beneficiary should take qualified legal advice asap and before doing anything?
http://www.thelawwizard.com/probate/guides/what-is-a-deed-of-variation.html

rogerblack

If the sole beneficiary is indeed legally the only one inheriting, then there is little legal problem if this is done right, given certain conditions.

If the other brothers could contest the will, and get a portion of the estate, then there is a possible problem with deprivation of capital, as above.
You can also deprive yourself of capital by failing to apply to the courts for what you could get.

However, if not, the simple route of the inheritor giving the neices/nephews money directly will work.
It may or may not work out better taxwise to do a deed of variation, I don't know.

It needs to be setup so that it is clearly the neices/nephews money - at no point can the other brothers have access to the cash money.

It may also be possible to setup a properly formed trust, to pay for certain expenses of the other brothers, without affecting benefits entitlement.

This is a complex area of law, and will need to be setup by a solicitor skilled in benefits.

allthatmularky

Thanks for the replies so far - I'm aware of the IHT and other financial considerations - it is the deprivation of assets rules and what may be seen as constituting a deprivation that I'm interested in.

There is no need for a deed of variation since there is a sole beneficiary who is freely passing the money to the other siblings or the nieces/nephews.

Since this is 'new' money to the siblings they thought they could receive it and pass it to their children - but I am suggesting that this may be better if the uncle who is the sole beneficiary passes it straight to the nieces and nephews.

xylophone

There is no need for a deed of variation since there is a sole beneficiary who is freely passing the money to the other siblings or the nieces/nephews.

There is indeed no problem with the sole beneficiary receiving the bequest willed to him and giving as much as he likes to anyone he chooses. BUT, what about his own IHT situation?

The inherited money becomes part of his estate immediately he receives it - will his estate be worth more then than the current IHT threshold?http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

http://www.hmrc.gov.uk/cto/customerguide/page21.htm

In this situation I would take qualified advice.

Dunroamin

Does the brother who's the beneficiary claim any means tested benefits or is he likely to need any care in the future?

xylophone

Does the brother who's the beneficiary claim any means tested benefits

I think we are all assuming not as the OP would have been quite sure that this was DOA?

he likely to need any care in the future?

There is no suggestion that the sole beneficiary is ill or disabled - as to the future, nobody has a crystal ball?

allthatmularky

topaziem wrote: »

But isn't this an act likely to lead to a potential fraud charge?

It is clearly in the mind of the beneficiary to try to avoid the other brothers getting involved with deprivation. At best it is a conspiracy charge.


But that was not what was in the will. I see that argument as intentionally fitting the desired end - how can we get round the question of deprivation.

yes you can prepare a Deed of Variation, but what you will have to establish if asked is why? Bypassing the two brothers will be seen as intent.

I think you misunderstand - legally there is one beneficiary and none of the surviving siblings wants anything to do with the money. They thought they could just transfer to the nieces and nephews as they wish - give to their parents and allow them to divide it between the family as they wish - I am warning that this may lead to an accusation of deprivation of capital. Better just to transfer the monies directly to the nieces and nephews.


Legally there is no chance of fraud or conspiracy to defraud - since there is no legal obligation to pay any of this money to anyone other than the beneficiary.
Please refrain from posting about something you clearly have very little understanding of......this is upsetting enough for the family without ill informed comment.

Teahfc

allthatmularky wrote: »

Legally there is no chance of fraud or conspiracy to defraud - since their is no legal obligation to pay any of this money to anyone other than the beneficiary.
Please refrain from posting about something you clearly have very little understanding of......this is upsetting enough for the family without ill informed comment.

Best advice in this thread is this then .

The sole beneficiary should take qualified legal advice asap and before doing
anything?
http://www.thelawwizard.com/probate/...variation.html

allthatmularky

xylophone wrote: »

I think we are all assuming not as the OP would have been quite sure that this was DOA?


There is no suggestion that the sole beneficiary is ill or disabled - as to the future, nobody has a crystal ball?

The sole beneficiary is well and is receiving no state benefits - its simply that the surviving siblings want nothing to do with the money and want it passed to the next generation.
I am sorting out the financial side - and all aspects of tax and monetary matters are fine since that is my background.

Rather the question was to do with the deprivation of capital rules that I am unfamiliar with. I am not benefiting from this at all only advising.
The problem that I could see was that the sole beneficiary didn't want the money and so was going to pass the 'problem' onto to the two other brothers to pass the money to their families. What I am warning is that although this may only touch their bank for a day and be transferred to their families - they could be laying themselves open to accusations of DoC.

I think its simply a generational thing - that the money is inside the family and they think its the same as splitting a few hundred pounds, that the parents deal with their children directly. All I am suggesting is that the money is paid directly to the next generation by the sole beneficiary who doesn't want the money.