DWP Claim and Estate distribution - advice please.

barryjarcher

Hi I'll try to keep this concise as possible.

• Father died last August
• Had estate worth over the £325k (incl' house value)
• Have a solicitor handling the estates affairs (Got a good deal, with negotiation :T)
• All cash assets (bonds, ISA etc) have been liquidated and is now in client money account of solicitor
• HMRC IHT has been paid
• House is sold but still going through the motions but looks good to finish in next 4 weeks.
• Myself and 2 sisters are executors

DWP have indicated that they are investigating income support & pension credit payments to him between 1993-2003. And investigation is ongoing and have been advised this could take months. Solicitor have advised not to pay out the estate until this has been completed.

Sisters have indicated that they would like the money from the house sale not go to solicitor handling the estate (apparently it doesn't legally have to go to them?) and be distributed.

I can see their point as it has been 10 months since his death and just when it looked like it was going to be distributed the DWP turned up with a claim. There is just over £50k in the estate account so they say that could cover any claim from DWP.

I have some concerns about this.

• We have no idea what the worse case scenario would be from the DWP claim - the usual we are unable to calculate that figure due to the complex nature (ie we don't know how our system works well enough to enable that)
• If we were to get the house payment paid elsewhere does it not need to go into a special account?
• Solicitor has been instructed to handle the estate so we are bypassing what we have asked them to do and not sure of the implications of this.
• Once the estate is paid, we would then be liable for the claim and not sure I want the DWP knocking on my door for payment as it may be over the £50k the solicitor is currently holding.

I'm just wanting to see the closure of it and having the estate distributed isn't going to achieve this.

I'd appreciated some advice and any past experiences of the DWP.

Thanks

Newly_retired

I can't answer your legal questions, but DH is still waiting for DWP to reach a final figure. His mother died in November 2013. He has supplied all information requested. It is now 3 months since they acknowledged they had got all the figures they need ( after repeatedly asking for the same info he had already supplied). So it is a long job.
But surely the amount owing, if any, would not be likely to be huge, and could easily be met out of the cash part of the estate.
It is quite normal to make a partial distribution, as long as you keep enough back. If there isn't enough left, the executors would have to pay it between them, but if they are beneficiaries, that would surely not be a problem.
Incidentally, DH reckons the DWP have spent far more in postage and stationery and time than is likely to be owed. We shall see.
I hope you have a quicker outcome than us.

Shelldean

We are in the same boat, minus a house sale.

Death was March 2014, and they still haven't given us a figure.

Due to complications, the investigation was put on hold for a couple of weeks recently (see my thread angry at Barclays) but is now hopefully moving g. DWp did say they was almost finished.
But if newly retired OH is still waiting from a November 2013, I can see.us waiting a lot longer.


The one thing to remember is that if you make a partial distribution to the beneficiaries, and there isn't enough cash left to pay DWP then the executor is liable I believe. But I may be wrong in my beliefs.

OH is our executor, and we're not making any payment to any beneficiaries until we know exactly what DWP expect to be repaid.
But in our case the sums will probably be quite large as the deceased was squirrelling away her money and hadn't declared most of it.

Shelldean

Just read your original post again, as yourself and.two sisters are the executors, then the three of you will be jointly liable for any shortfall.

So if you partially distribute may sure your sisters.are.prepared to help cover the shortfall should there be any.

In our case only executor, but three beneficiaries. Hence the reason we are waiting to finalise everything before distribution

SeniorSam

barry .... could IHT have been averted with a Deed of Variation? If your Mother dies first, then there may have been £650,000 allowed before taxation.

The solicitor is understandably being cautious, as if the debts are large, he could be responsible in making interim payments at this time. I think you need to wait and it may be some time as the authorities know they can take time with the estate funds held in limbo.

barryjarcher

Thanks for response so far,

father divorced from mother in the 70's so no he's liable for the single persons IHT - fully checked that out, despicable tax.

Will is divided to 3 beneficiaries and the remainder a equal split between myself and 2 sisters (all execs)

Its quite a substantial estate, we all knew the value of the house to some degree but it shocked us all what he had in bonds and savings. I believe estate worth was £460k and the house sold for more than was valued at death.

I'm fully ware that as executors we are fully liable if estate paid out and debts come in.

Looking at other forum posts interim payments are common. Are all beneficiaries treated equally? i.e. the largest or first stated in will doesn't need paid out first.
As I'm thinking that I maybe pursue an interim payment to executors as they would be the ones liable for debt payments and would need to accept risk of having to pay it back.

System

I would think that you need to pay the beneficiaries first then look to interim payments to the executors as they get the residue, not a stated amount.

Unless the DWP bill is going to be huge then the beneficiaries are going to get their full inheritance regardless

barryjarcher

Thanks !!!!!! but I need more than a think. If they would "need" to be first paid out I would opt for no interim payment as I'm not going to have money handed out liability free of having to pay it back.

SeniorSam

The distribution of the estate in accordance with the Will is up to the Executors. They have been appointed to administer the estate and are also fully liable for any debts. It would seem that some interim payment could be made, but all Executors must agree and must also accept thier responsibility.

The fact that a solicitor is dealing with matters, having been instructed by the Executors, that solicitor is bound by the instructions of the executors. However, he may make suggestions that you would be unwise to ignor. However, he or his Practice would not be liable or responsible if he were to have had written instructions from the Executors.

Sam

PS. The beneficiaries may wish to consider their own estate position and the steps they could take to minimise or eliminate IHT on their own estates if they have not already thought about this.

Weary_soul

As far as any possible overpayment is concerned, how much of the estate is made up of savings and bonds/shares etc during the time your father was claiming? Income support is means tested and pension credit depends on a number of factors.

You could try looking for info about capital limits on both these benefits on the net (also maybe council tax allowances if he was claiming any) and that may give you a rough idea as to what to expect.

If there is a big overpayment, remember to ask the DWP for the diminishing capital calculation to be applied as when that is taken into account it can knock the overpayment down somewhat.

barryjarcher

PS. The beneficiaries may wish to consider their own estate position and the steps they could take to minimise or eliminate IHT on their own estates if they have not already thought about this.

Not quite sure what you mean here, you mean in the event of their death?