Deprivation of assets - inheritance

allthatmularky

Best advice in this thread is this then .


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

Thanks for the reply but we don't need any legal advice on deeds of variation - its not about about changing the will.

What I wanted to know was although none of the brothers wanted anything to do with the inheritance - would this transfer of cash for however short a period of time (which was simply family etiquette) possibly lead to problems under DoC rules? IE there was no intention ever that the money remain with the brothers only rather that they act as a conduit. No one has answered this question yet.

The simple thing legally is to transfer the cash from the sole beneficiary to the nieces and nephews without observing the niceties of family etiquette. I know legally this is fine and without any problems - just wanted to know if we could transfer it observing their family culture.

xylophone

No one has answered this question

Have you read post 3?

The sole beneficiary receives the money. Fine, it becomes his money. Is his own estate now above the IHT free allowance? Then there might be IHT considerations for him.

He gives it to his two brothers. Fine -it now becomes their money.
They give it away - then they could have IHT to consider on their own estates and the brother on benefits has DOA considerations as well.


If the idea is for the nieces and nephews to have the money, then a Dof V seems the cleanest and simplest solution because the individual who has foregone the legacy is not deemed to have made the gift but instead it is the deceased who is deemed to have made it?
Especially if the sum is substantial, it would be a good idea to take advice?

rogerblack

allthatmularky wrote: »

What I wanted to know was although none of the brothers wanted anything to do with the inheritance - would this transfer of cash for however short a period of time (which was simply family etiquette) possibly lead to problems under DoC rules? IE there was no intention ever that the money remain with the brothers only rather that they act as a conduit. No one has answered this queaction yet

See my post 4.
In short - their 'not wanting anything to do with it' is straightforward deprivation of capital.
They cannot avoid being treated as having had this money - even if they do not claim it.
If later discovered, this will lead to at best an overpayment of means tested benefit, and at worst a prison sentence, with proceedings to sell their assets from under them to recover the money. (Including selling assets that would not normally be possible, like an owned house)
Due to the way the benefits system works, the overpayment can end up as considerably more than the sum inherited.
(If they are determined to have done this for the primary purpose of avoiding getting less benefit)

A notice of variation _cannot_ change this.
If the person had made a different will first, there is no issue.
But it's too late now to arrange the estate so that it as least effect on benefits,
The benefits system assumes you have the amount of money you could have had, if you applied to the courts for it.

Dunroamin

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 OP seems very unclear about the whole thing, which is why I thought it worth clarifying.

I had the impression of three elderly brothers with two of them in care homes so the possibility not unlikely for the third.

Dunroamin

allthatmularky wrote: »

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.

I don't think that both these things can be true.

insured

If only one son was given the bequest and it was intended that the three sons should benefit, then the aunt has created what is called a secret trust.
There are two types of secret trust.
1. Half secret trust
2. Fully secret trust.

A half secret trust is when a beneficiary has been given a bequest and it is clear from the will that he was not the intended beneficiary. So the will would say "I give to X, to whom I have made my wishes known."
A fully secret trust is when it is not apparent from the will that there is a trust. So the will would say "I give to X"
Secret trusts are made for all sorts of reasons, some of which are obvious, illegitimacy, others not so obvious eg to circumvent a perpetuity period for a trust. Sometimes it is done to get round means testing for state benefits.
So if aunt had intended the bequest to be for all the sons and had told son 1 that this was the intention, then a secret trust has been created.
If you google "secret trust" it explains it in more depth.
So, if aunt created a secret trust then, it depends on the terms of the trust which would have been conveyed to the brother who got the money.
If she said, "I want you to give it to your 2 other brothers," then it would indeed be a deprivaiton of assets if the brothers then gave it to their families.
However, if aunt said "You hold this money at your discretion and you can pass the funds to whoever (within a certain class of beneficiaries) you think fit" then it is not a deprivation of assets if brother number 1 gives it to the families of brothers 2 & 3 because it would prejudice their benefit position if he passed it to brothers direct.
I think the OP should go to see a solicitor who has experience in both benefit and trust law.
Sorry for the long reply, but this is a complicated topic.
BTW aunt would have been better off just creating a discretionary trust in her will, and the trustees (brother no 1) could have distributed the funds in the most tax efficient and benefit efficient manner.

allthatmularky

Thanks for all the responses - perhaps I'm struggling to explain exactly what advice I'm after - but people are reading between the lines and creating problems that are not there.

The basic situation is that there were four siblings - a sister and brother living in the same house who never had families and two brothers who live in their own houses and have families.

Just so as you know this has been looked at by a qualified accountant and solicitor and is fine for IHT - the estate of the beneficiary is not large enough for any IHT complications. Hence why this will be a simple gift and no need for any deed of variation. So please forget about deed of variations, they don't come into play here.
The area that I'm unsure of is the deprivation of capital rules.

Of the three brothers - one lived with the aunt (they were brother and sister) who has died hence the will was set up to ensure that they looked after one another on death - hence he is the sole beneficiary. He is fine and living in the house that they have shared for years.
He has said that he has enough money and wishes to give it to his nieces and nephews - the families of his brothers. The other brothers never had a claim on their sisters estate and were in agreement that the wills between the other brother and sister protected the two living together.
As the sole beneficiary - he has not and will not have estate that brings IHT into the equation.
The other two brothers both live in their own homes (not care homes) and both have carers - one is funding their care privately and the other is dependent on the state.

They thought that once the estate was settled that they could just transfer the monies between the two brothers with families and onto the nieces and nephews.
I said this could be very complicated - because of the fact that both are receiving care and advised that the brother who is the sole beneficiary just simply pass it to his nieces and nephews.
I know for a fact that this is ok legally and is not a problem - one of the nephews is an accountant.

The hazy area was the deprivation of capital rules that I was hoping someone would be knowledgeable about.

What I was dubious about was that even the brother who is privately funding his care could not receive the money and pass it on since there may come a point in the future where the state needs to help and this transfer of cash could be seen as DoC.

I think in conclusion - that rather than complicate matters - the money will be transferred straight from the original beneficiary. It appears from what people have written is there is no ability to pass the money through the parents of the intended recipients of this gift - even if there was never any intention that they benefit from this money.

allthatmularky

insured wrote: »

If only one son was given the bequest and it was intended that the three sons should benefit, then the aunt has created what is called a secret trust.
There are two types of secret trust.
1. Half secret trust
2. Fully secret trust.

A half secret trust is when a beneficiary has been given a bequest and it is clear from the will that he was not the intended beneficiary.

No - please read the postings that I have made - the intention of the will is clear - the situation is about four siblings not sons and aunts.

allthatmularky

Dunroamin wrote: »

The OP seems very unclear about the whole thing, which is why I thought it worth clarifying.

I had the impression of three elderly brothers with two of them in care homes so the possibility not unlikely for the third.

No I'm not unclear about the whole thing - what I wanted was some clear concise advice about the DoC rules.

Where in the thread does it state the two brothers are in care homes? Please use the facts given, not the 'impressions' that you have.

I think a number of posters to this thread have taken the starting position that this about trying to avoid paying care costs - its not, its about the intentions of achieving what the sole beneficiary wishes to happen with the consent of his two brothers.
That is that the nieces and nephews benefit from the estate.

In reference to your post about both intentions not being able to both be correct -

The intention is that once the estate is realised that the money will be split three ways between the surviving brothers.

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.

Yes they are both correct - if you notice one is arguing the intention of the will and the other is an intention once the estate is settled by the main beneficiary.

rogerblack

allthatmularky wrote: »

Thanks for all the responses - perhaps I'm struggling to explain exactly what advice I'm after - but people are reading between the lines and creating problems that are not there.

<snip>
think in conclusion - that rather than complicate matters - the money will be transferred straight from the original beneficiary. It appears from what people have written is there is no ability to pass the money through the parents of the intended recipients of this gift - even if there was never any intention that they benefit from this money.

Problems arise because ambiguities that seem unimportant to you can make massive differences legally.
Anyway.
If the other brothers in fact have no legal claim to the estate, then the concerns above about deprivation of capital due to them not claiming their due are irrelevant,

As is the source of the money.
The inheritance is irrelevant for benefits purposes, and the situation is the same as if it was the inheriting brother just deciding to give a gift.

This is a much simpler situation, and giving directly to the children is the simple way.
If they are of age, no further consequences arise.
If they are not, I am unsure if capital the child may posess is, or will under universal credit be counted in some way.
If this is the case, then a suitable trust till the child is of age may be needed.