How can we Protect my Sister's Inheritance

Yorkshireman99

securityguy wrote: »

"The difficulty is people cannot grasp the fundamental way a simple DOV works. In this particular case the person simply renounces the inheritance."

That simply isn't true, either in specific or general. A deed of variation is an instrument which describes changes to the distribution of an estate. It may change amounts, forms, timescales, anything which is contained in the will. It might alter one bequest, it might effectively tear up the entire will and start again. It requires the agreement of everyone whose position is materially negatively affected, and the wise executor would draw "materially" widely. At the point at which the change is made, the agreement is to the eventual outcome: you don't renounce a legacy and hope that the right thing happens later. A document which describes the new distribution is drawn up and agreed to by everyone affected where there's the slightest prospect they might be held to have been disadvantaged. You keep on talking about renouncement of legacies and them falling into the residue: that isn't a deed of variation, it's just renouncement.

"These confirmed renouncing a legacy is regarded as asset deprivation."

That's right. But a deed of variation isn't necessarily renouncement, and I've shown you the sections in in the DWP decision maker's guide which describes this.

Taken to the limit, you seem to be arguing that a deed of variation whose effect was to replace a car worth five grand with five grand in cash would be deprivation of assets. It clearly wouldn't. The precise scenario I outlined was replacement of £X with an annuity with a net present value of £X. I can see arguments in both directions, and in the end a statement from the DWP relating to that precise scenario for the precise claimant is the only thing that matters. But that does not involve, and is not, renouncement.

As far as I can see you are over thinking the problem. This is according to my solicitor who, I believe, with no disrespect intended, has greater knowledge than either of us, told me. To alter the terms of a will so that the distribution is altered using a DOV is well known. Most frequently this means that two or more beneficiaries agree to change the amount they receive usually to reduce potential double IHT liability. I am sure it is common ground that all those affected detrimentally by this have to sign the deed. However there are situations where a single beneficiary does not, for whatever reason, wish to accept the bequest to them. Nobody else needs to give their consent since they suffer no detriment. Whilst it may be known as renouncing the bequest the mechanism is still actually a DOV. The rationale for it being deprivation is that the moment probate is granted then the bequest becomes an asset of the beneficiary. Note that as soon as the beneficiary is notified of the bequest they are also obliged to disclose it to the appropriate authority. She also made it very clear that whatever juggling of the terms of a will might be done by a DOV none of them will prevent the DWP or local councils treating it as deprivation of assets. However it is ultimately for the Court to decide what the statutory rules mean rather than the DWP manuals.

securityguy

"However there are situations where a single beneficiary does not, for whatever reason, wish to accept the bequest to them. Nobody else needs to give their consent since they suffer no detriment. Whilst it may be known as renouncing the bequest the mechanism is still actually a DOV"

All elephants are grey animals. Not all grey animals are elephants.

Even if we accept, arguendo, that renouncement creates an implicit deed of variation, that does not mean that all deeds of variation are renouncement.

"The rationale for it being deprivation is that the moment probate is granted then the bequest becomes an asset of the beneficiary."

Second part true, first not. Read the decision maker's guide. It's perfectly clear that the issue is far more complex than you make out, and that intention to obtain additional benefits is a key requirement (indeed, one reason a transaction is not deprivation is if the claimant can show that they genuinely didn't realise that the effect of the transaction was to alter their benefit position). It isn't strict liability. Intent and effect are key points, not the precise legal transaction.

"She also made it very clear that whatever juggling of the terms of a will might be done by a DOV none of them will prevent the DWP or local councils treating it as deprivation of assets."

Suppose a DOV is used to replace an unsaleable quarter share in a house with an equivalent amount of cash. Are you seriously saying that would constitute deprivation of assets? That would contradict the DMG and be manifestly unreasonable, as well as being completely self-defeating: the DOV in this case would _reduce_ the claimant's entitlement to benefits. Indeed, more generally, are you saying that a DOV whose effect is to _reduce_ entitlement to benefits is deprivation? Why would the DWP argue that?

The DMG makes it entirely clear that the effect and intent of the transaction are crucial to the contention that the transaction is deprivation.

Malthusian

willieormandsheroes wrote: »

I am sure that a trust paying say even just £1000 a month would more than meet their needs even with means-tested benefits stopped. Though whether or not her husband keeps that income from her, as he currently does with her benefits, who will know. At the moment she gets drip fed her own benefits from his bank account - she does not get to manage them in any way.

I'm going to have at the Gordian knot here and say the only real solution is for her not to inherit anything. Not as cash, not as a trust, not as an annuity. From the way you are describing the situation, regardless of how you put the money in her pocket, it is going to end up in his pocket. If he can manipulate her and her banking arrangements to get Government benefits paid to him then he can certainly do the same with annuity or trust income. If you don't want it to end up in his pocket, only solution is not to give it to her (beyond, as was suggested above, small amounts like bus fare to see mum).

If she renounces her share of the Will but the DWP assesses it as deprivation of capital and stops her means tested benefits, she loses very little anyway as she isn't getting them, this creature is. And from what you've said she wouldn't be in danger of starvation without them thanks to the goodwill of her family.

If she would refuse to recognise the situation she is in, and renounce her inheritance, then sadly we are getting to the limit of what you can do to influence a grown woman in charge of her own affairs. The inheritance is a distraction from the real issue which is getting rid of this creature.

If she inherited £100k and he nicked the lot and fled to Cyprus, it might be a price worth paying.

Yorkshireman99

securityguy wrote: »

"However there are situations where a single beneficiary does not, for whatever reason, wish to accept the bequest to them. Nobody else needs to give their consent since they suffer no detriment. Whilst it may be known as renouncing the bequest the mechanism is still actually a DOV"

All elephants are grey animals. Not all grey animals are elephants.

Even if we accept, arguendo, that renouncement creates an implicit deed of variation, that does not mean that all deeds of variation are renouncement.

"The rationale for it being deprivation is that the moment probate is granted then the bequest becomes an asset of the beneficiary."

Second part true, first not. Read the decision maker's guide. It's perfectly clear that the issue is far more complex than you make out, and that intention to obtain additional benefits is a key requirement (indeed, one reason a transaction is not deprivation is if the claimant can show that they genuinely didn't realise that the effect of the transaction was to alter their benefit position). It isn't strict liability. Intent and effect are key points, not the precise legal transaction.

"She also made it very clear that whatever juggling of the terms of a will might be done by a DOV none of them will prevent the DWP or local councils treating it as deprivation of assets."

Suppose a DOV is used to replace an unsaleable quarter share in a house with an equivalent amount of cash. Are you seriously saying that would constitute deprivation of assets? That would contradict the DMG and be manifestly unreasonable, as well as being completely self-defeating: the DOV in this case would _reduce_ the claimant's entitlement to benefits. Indeed, more generally, are you saying that a DOV whose effect is to _reduce_ entitlement to benefits is deprivation? Why would the DWP argue that?

The DMG makes it entirely clear that the effect and intent of the transaction are crucial to the contention that the transaction is deprivation.

I simply quoted what a well qualified professional told me and whatever you say will not change that in my opinion. I will only repeat that the DMG is not a definitive statement of the law and as such is just a guide. As I said before it is for the Court to decide if someone wishes to challenge a DWP or Council ruling. In this particular case it seems to be way off topic. Unless the sister is prepared to break with her abusive partner there is little anyone else can do.

willieormandsheroes

From what @Yorkshireman (and others) have said - it sounds like my sister could renounce her inheritance through a DoV. Her renounced inheritance would be distributed between my brother and myself. Would my sister continue to receive her means-tested benefits?

We could then buy a property by pooling our shares - the house would be ours - nothing to do with my sister and she would get no benefit from it. When my sister reaches pension age we could give her the house. At that point she'd lose any means-tested benefits she was still receiving - but would be able to sell the property and live her 'retirement' off the proceeds,

JimmyTheWig

willieormandsheroes wrote: »

From what @Yorkshireman (and others) have said - it sounds like my sister could renounce her inheritance through a DoV. Her renounced inheritance would be distributed between my brother and myself. Would my sister continue to receive her means-tested benefits?

I think about the one thing that everyone is agreed on here is that if she renounced her inheritance then she would lose her means-tested benefits.

Regardless of how she can get there, what does your sister want to happen?

securityguy

willieormandsheroes wrote: »

From what @Yorkshireman (and others) have said - it sounds like my sister could renounce her inheritance through a DoV. Her renounced inheritance would be distributed between my brother and myself. Would my sister continue to receive her means-tested benefits?

No-one is saying that. If she renounces the inheritance, it's deprivation of assets, and she will be assessed as still having the money. The end. There is no debate about this.

YM and I disagree about the implications of a deed of variation replacing a sum of money with another bequest of a "similar" value. I argue that the nature and value of the replacement is important in law, he disagrees. Whatever: we are absolutely agreed that if y9u sign a deed of variation or otherwise decline to accept a bequest, it is straightforwardly deprivation of assets.

We could then buy a property by pooling our shares - the house would be ours - nothing to do with my sister and she would get no benefit from it. When my sister reaches pension age we could give her the house. At that point she'd lose any means-tested benefits she was still receiving - but would be able to sell the property and live her 'retirement' off the proceeds,

She would lose means tested benefits in the meantime, because of the deprivation of assets involved in her forgoing the cash. You cannot do this if she, or her household, is currently in receipt of means tested benefits. She will be assessed as having the cash that she renounced. The end. There is no debate about this.

I am arguing that if she, say, forwent a cash inheritance for an annuity, she might be able to be assessed on the basis of the income on the annuity rather than the cash used to purchase it. YM disagrees. It would be for a decision make and ultimately a court to decide. This is the exploration of ideas on a forum.

However, to be exactly clear: renouncing an inheritance in exchange for no consideration is deprivation of assets, and you will be assessed for means tested benefits as though you had the inheritance. The end.

Yorkshireman99

willieormandsheroes wrote: »

From what @Yorkshireman (and others) have said - it sounds like my sister could renounce her inheritance through a DoV. Her renounced inheritance would be distributed between my brother and myself. Would my sister continue to receive her means-tested benefits?

We could then buy a property by pooling our shares - the house would be ours - nothing to do with my sister and she would get no benefit from it. When my sister reaches pension age we could give her the house. At that point she'd lose any means-tested benefits she was still receiving - but would be able to sell the property and live her 'retirement' off the proceeds,

The professional advice that I have had is that she would lose her means tested benefits regardless of her renouncing the legacy or not. However, the bigger question is what does she want to do? As far as I can see, however well meaning you are, unless and until, she is prepared to break free from the abusive relationship nobody else can do much about it.

Yorkshireman99

securityguy wrote: »

No-one is saying that. If she renounces the inheritance, it's deprivation of assets, and she will be assessed as still having the money. The end. There is no debate about this.

YM and I disagree about the implications of a deed of variation replacing a sum of money with another bequest of a "similar" value. I argue that the nature and value of the replacement is important in law, he disagrees. Whatever: we are absolutely agreed that if y9u sign a deed of variation or otherwise decline to accept a bequest, it is straightforwardly deprivation of assets.



She would lose means tested benefits in the meantime, because of the deprivation of assets involved in her forgoing the cash. You cannot do this if she, or her household, is currently in receipt of means tested benefits. She will be assessed as having the cash that she renounced. The end. There is no debate about this.

I am arguing that if she, say, forwent a cash inheritance for an annuity, she might be able to be assessed on the basis of the income on the annuity rather than the cash used to purchase it. YM disagrees. It would be for a decision make and ultimately a court to decide. This is the exploration of ideas on a forum.

However, to be exactly clear: renouncing an inheritance in exchange for no consideration is deprivation of assets, and you will be assessed for means tested benefits as though you had the inheritance. The end.

Let me correct the above statement. The basis of my disagreement is the paid for professional. advice I have received. That is that a DOV to renounce the bequest itself is a deprivation of assets regardless of what scheme may be concocted in substitution of it.

Marvel1

I'm just going to say it like it is, if still married your Sister is not going see the money.

Your Sister needs get her head out the sand, get tough and get out this marriage. You could even help by having her stay at your place for a few months for safety.

However if she does not want help, then that is her problem.

willieormandsheroes wrote: »

She is thinking of buying a flat/house and renting it out.

If she can't leave the marriage, how is she going to manage to run a business?