inheritance and benefits

hammergirl

Hi this is my first post so I hope I am in the right place. Sorry if its too long.


A friend is the executor for her mother's estate. The beneficiaries are my friend and her sister. My friend works but her sister is on benefits - housing, income support (or whatever the equivalent is now called) and child benefit. The sister is married and her partner is classified as sick.


The estate includes a house which will mean the sister is above the capital limits when she inherits 50%. She does not want to come off benefits and so has been trying to find different ways to keep the money without affecting her benefits. My friend has made it clear she has a legal duty to deal with the estate in accordance with the will and that she won't do anything dodgy.


The latest proposal by the sister is to officially disinherit herself. My friend says this will require a statement witnessed by a solicitor. She obviously has to protect her position as she will inherit the full estate if her sister decides not to take her share. The sister has asked my friend to pay her share to her adult daughter ( my friend's niece). It is clear to all of us that this is an attempt to hide the inheritance and that the sister has made an arrangement with her daughter. The money will not be spent by the daughter.


My friend does not want to be implicated in any type of fraud. Her sister has four children and so she would not pay the money to just one in any case as she feels this would not be right. She feels her sister is trying to pass the problems onto her. If it were me I would just keep the full 100% and risk falling out with my sister as she is clearly trying to defraud the system.


My question is what if any are the legal implications for my friend?

missbiggles1

Google "deprivation of capital" and tell your friend to stay well away from her dishonest sister's plans.

Ames

I don't know about your friend, but the sister's benefits will still be affected if she disinherits herself. Except, instead of having the money and no benefits, she'll have no benefits and no money.


It's called 'deprivation of capital' and 'notional capital'. I was in a similar situation except that I was the non working administrator of the estate and my sister was the working beneficiary who was trying to convince me to give up some of my inheritance.

Ames

With regards your last sentence, your friend can't just keep the whole lot for herself. She has to act in accordance to the will.


I can understand your friend's sister being scared of not being on benefits, and for not wanting the money to be spent at benefit rates. She's grieving for her mum, facing big financial changes, and probably feeling that her mum worked hard for the money to disappear without anything to show for it.


But.


There are a lot of positives. Obviously it depends on how much the inheritance is, but having a couple of years or more free of worry about benefit changes, not being scared every time a brown envelope lands on the mat, being free of assessments or signing on or whatever other restrictions she's under... they're benefits not to be sniffed at.


And she can buy some things with it legitimately. Replace old white goods, any adaptations her partner needs, redecorating, maybe a reasonably priced holiday. (but she'd need advice on that).


I've gone from feeling as I describe above to looking forward to getting my money and having a 'holiday from benefits'.

specialboy

Your friend can stop scrounging off the state for a while until the bequest runs down then start claiming again, got a feeling this is a wind up post tbh.

billywilly

specialboy wrote: »

Your friend can stop scrounging off the state for a while until the bequest runs down then start claiming again, got a feeling this is a wind up post tbh.

I wouldn't say so. This is in fact quite common. They can't understand why an inheritance should have to be spent to live on instead of receiving benefits. It is highly likely that the deceased would not have wanted this to happen. All it does is to relieve the government of paying a legitimate benefit whilst someone else's hard earned money is being used to provide a living instead.
When you look at it that way - would I be happy if what I leave to my children may have to be used for them to live off whilst the government stop paying their benefits - I am in fact helping the government to save money.
What should have happened in cases like this is for the deceased to have made proper provision in the will should any of the beneficiaries be in receipt of a means tested benefit when they died - quite simple and very effective.

I was to receive an inheritance a while ago, but as it was likely that I would be claiming Pension Credit, my father with my help revised his will so that I did not become a beneficiary - my children's family trust became the beneficiary instead. Consequently that capital can never be treated as mine.

hammergirl

This isn't a wind up.

My concerns are not for the sister who is trying to defraud the system but for my friend as the executor. She is being put in this difficult situation. We fully understand the issues about deprivation and notional capital but those are issues for the sister. We find it hard to believe she would want to put her family at such risk by not being straight with everything.

What I'm asking is whether there could be any implications for my friend, because she is the executor, if her sister is found to be defrauding the benefit system.

10pence

Your friend is best carrying out the wishes of her late mother, due to her suspicions over the sister's plan to give to the daughter, she could be complicit in the fraud she is trying to avoid.

billywilly

hammergirl wrote: »

This isn't a wind up.

My concerns are not for the sister who is trying to defraud the system but for my friend as the executor. She is being put in this difficult situation. We fully understand the issues about deprivation and notional capital but those are issues for the sister. We find it hard to believe she would want to put her family at such risk by not being straight with everything.

What I'm asking is whether there could be any implications for my friend, because she is the executor, if her sister is found to be defrauding the benefit system.

Not at all. As the executor she is responsible to executing the will. If during the course of that duty, one of the beneficiaries comes along with a signed legal document disclaiming their inheritance, the executor is required to comply with that request. As there are only two beneficiaries, the whole of the estate will then pass to the remaining beneficiary.

What the reasons are behind the disclaiming or who gets what after the distribution has nothing to do with the executor they have a job to do and they must do it.
It would certainly be different if the beneficiary didn't bother to get a disclaimer properly drawn up and did 'a deal with the executor' to get round DWP regulations.
Do it all legal and above board and the executor can't be held responsible for who does what afterwards and why.

billywilly

10pence wrote: »

Your friend is best carrying out the wishes of her late mother, due to her suspicions over the sister's plan to give to the daughter, she could be complicit in the fraud she is trying to avoid.

She should distance herself then. Don't get involved. Do it the legal way as in my post above.
I along with my sister were the executors of our dad's estate. She wanted to know the in's and out's as to why I had given away my entitlement and had dad change his will. Nothing to do with her, my dad knew that it was to protect myself from being found to have capital either for benefits or care fees. During the winding up of the estate she asked again. I then told her that it was to make sure that the DWP or the LA could not get their grubby little mits on any of it. She accused me of fraud - but where is the fraud - we are carrying out dad's wishes and I get protection.

konark

The sister can claim benefits until the money from the house sale hits her bank account. However if the house was a specific bequest, not just part of the residual estate I'm afraid she is deemed to (half) own it from the date of death, although she does get a grace period of 6 months to sell the house where it isn't counted as capital (or longer if she is genuinely trying to sell it).