Overpayment of benefits

Bobble72

My dad died in November 2013. My sister and I were named as executors in his will and we dealt with the probate. He owned his own home which we have just sold (completion date 20/6/14). I have two questions, which I hope someone can help me with, the first one is do we pay capital gains tax on the income from the property it was sold for £62,995? The second question is that the DWP contacted us in March 2014 to tell us that my dad had been overpaid his benefits. He claimed pension credit from 2011 when his bank balance was £5,500. He lived very frugally and when he died he had £15,000 is his bank account. Obviously we must pay back any overpayment but the DWP have told us not to distribute the estate but what about the proceeds from the sale of the house, can we distribute those?

dzug1

What was the value of the house for probate? And do you mean tax on the income from it (was it rented out?) or the capital value


Would be best not to distribute the house proceeds unless you are willing to pay back some of the money should the rest of the estate be insufficient.

CarterW

Debts and taxes must be settled before an estate is distributed, however it sounds like the debt was unknown at the time. Executors are legally responsible for settling the estate correctly so would be liable for the debt, however if you and your sister are the only beneficiaries then this doesn't really matter.

In regards to the property, it depends on the value of the property at time of death, but i can't imagine you be over the annual capital gains tax allowance.

Bobble72

Thanks for the replies. My dad house has been sold prior to that he was in hospital/intermediate care. The house has been sold for £62,995 less solicitors/estate agent fees. He claimed pension credit when his bank account was roughly £5,000. After his death another bank account came to light which meant that he shouldn't have claimed pension credit at all. I think that he claimed pension credit to enable him to get home care at a reduced price but can't be sure.

pmlindyloo

Bobble72 wrote: »

Thanks for the replies. My dad house has been sold prior to that he was in hospital/intermediate care. The house has been sold for £62,995 less solicitors/estate agent fees. He claimed pension credit when his bank account was roughly £5,000. After his death another bank account came to light which meant that he shouldn't have claimed pension credit at all. I think that he claimed pension credit to enable him to get home care at a reduced price but can't be sure.

You need to check very carefully about this overpayment of Pension Credit.

First of all it is common practice to send letters like this after a death.

Did they actually say how much the overpayment was?

It is a little unclear as to whether your dad had this second bank account when he first claimed Pension Credit or he saved the extra money after being awarded PC.

Eligibility for PC is different to other benefits. He would be allowed £10000 of savings. Any savings after that would have been deducted from his assessment at £1 for every £500 (or part of)

Of course any other pensions he had would have been used in the assessment.

The other thing to note is that if he had below £10000 in savings when he first applied for PC then his award may have included an Assessed Income Period during which any increase in savings does not have to be declared.

You need to write and ask for details of the overpayment. When you get this you need to check his banks statements to find any income/savings (plus the dates) and also his PC award letter to check if he was given an Assessed Income Period.

If you need any help with this then go to CAB with all the paperwork.