Deed of variation

AnotherJoe

Connery said:

My father has passed away leaving the house to me and my two sisters and one brother, my eldest sister wants us to do a deed of variation before probate so she can leave her share to one of her children, whilst I know this is perfectly legal I know that she will still have use of the money, she is only doing it so that her benifits are not affected, this is morally distasteful to me and the other two, what I need to know is whether we would be committing fraud if we know what she is doing, I am going to say no but a legal reason as to why not would be helpful as this is obviously going to cause problems within our family

You can't say no because you dont have to do anything, she does it and you have no say in it. Only those affected by a DoV sign it, that would be her. You arent affected.

Assuming you are an (the?) executor and regardless of a DoV paid the money to her she could just ship it immediately to daughter, and legally (IANAL) I suspect youd be at fault for sending it to the wrong person. 

None of this is any comment on the legality of what she is doing.

MoneySeeker1

Personally - I'd find it morally distasteful - but for a rather different reason, ie you've said she wants to leave it to "ONE of her children". That implies she has two or more children - and want to leave them out of it. What are her plans for ensuring fairness between her children - ie leaving it equally between them?

Cue for her "one or more other children" are likely to share your upset on this.

Malthusian

MoneySeeker1 said:

Personally - I'd find it morally distasteful - but for a rather different reason, ie you've said she wants to leave it to "ONE of her children".

You've missed the next bit - "I know that she will still have use of the money". The money isn't actually going to that one child, it's just going to be hidden (badly) in their bank account.

The other children are the ones who are doing well out of this because they aren't being dragged into benefit fraud.

pphillips said:

Exactly, she's only using the DOV and her child as an instrument of fraud thinking she can claim state benefits while also dipping into her inheritance. How utterly deplorable!

Devil's advocate time - if her father had been better advised he could have just left the money to her children in the first place. They could then have, perfectly legally, used that money to take their ma on holiday or bought her furniture or similar without affecting her benefits. Exactly the same outcome as what she is now trying - too late - to achieve, only perfectly legal.

In terms of the effect on the Government finances, it is no different to DOVing an estate to save Inheritance Tax. If it's an IHT scenario, if your parents don't leave their estate in the most tax-efficient manner, you can use a DOV to fix their mistake and the Treasury loses the money it would have gained by it. If it's a benefits scenario, you can't. 

Yes, there's a moral difference because tax-efficiency is keeping more of your own money while benefits-efficiency is keeping more of other people's. Whatever helps people who minimise their tax bill sleep at night (including me). I point this out merely to make it easier to understand why someone in a different financial position would not see it as morally wrong to do exactly what people whose parents carelessly leave them IHT bills do, use a DOV to fix the parent's lack of planning.

thepurplepixie

MoneySeeker1 said:

Personally - I'd find it morally distasteful - but for a rather different reason, ie you've said she wants to leave it to "ONE of her children". That implies she has two or more children - and want to leave them out of it. What are her plans for ensuring fairness between her children - ie leaving it equally between them?

Cue for her "one or more other children" are likely to share your upset on this.

Leaving the benefit fraud aside why is it morally distasteful to leave your money to anyone you like?  Have you thought one child might deserve more, perhaps the one who has always looked after mum or the one who isn't going to blow an inheritance on drugs or the one the mother might feel needs more support.  I've got 4 children and I will leave anything I have to whoever I like, might be the dogs home, might be grandchildren if I feel my children are OK financially as I think the next generation are going to have a hard time.  Or perhaps I'll blow it all on fine wine and cruises and gigolos.  My money my choice.  It can also be more sensible to leave it to GC and miss out one lot of inheritance tax.

pphillips

Malthusian said:

pphillips said:

Exactly, she's only using the DOV and her child as an instrument of fraud thinking she can claim state benefits while also dipping into her inheritance. How utterly deplorable!

Devil's advocate time - if her father had been better advised he could have just left the money to her children in the first place. They could then have, perfectly legally, used that money to take their ma on holiday or bought her furniture or similar without affecting her benefits. Exactly the same outcome as what she is now trying - too late - to achieve, only perfectly legal.

In terms of the effect on the Government finances, it is no different to DOVing an estate to save Inheritance Tax. If it's an IHT scenario, if your parents don't leave their estate in the most tax-efficient manner, you can use a DOV to fix their mistake and the Treasury loses the money it would have gained by it. If it's a benefits scenario, you can't. 

Yes, there's a moral difference because tax-efficiency is keeping more of your own money while benefits-efficiency is keeping more of other people's. Whatever helps people who minimise their tax bill sleep at night (including me). I point this out merely to make it easier to understand why someone in a different financial position would not see it as morally wrong to do exactly what people whose parents carelessly leave them IHT bills do, use a DOV to fix the parent's lack of planning.

Except what you are suggesting is not fraud because she has no control over the money whatsoever and her child is entirely free to use it as they see fit. If the father had wanted her to act fraudulently, he could have made her the beneficiary of a secret trust held by her child. 

Mickey666

Aside from the moral issues here, can we confirm who exactly is/are the executor(s)?  We know the beneficiaries are two sisters and a brother, but are they ALL also joint-executors?

I ask this because I'm wondering if the executor(s) have any legal duty regarding this whole DOV thing given that they know the sister concerned is only asking/doing this in order to hide her inheritance from the benefits office, which must surely be an offence?

If the other executors know about this, would they be accomplices to such benefit fraud?

Connery

That was really what I was trying to find out, fortunately I am not an executor, my younger sister and older brother are, I am worried that they could be accused of fraud

Connery

My older sister and myself are not executors 

Mickey666

Ah, I mis-read - so there are four beneficiaries, the OP, two sisters and one older brother.  Only the brother and younger sister are executors.  It's the older sister who wants to make the DOV to avoid benefit issues, thereby committing (potentially?) benefit fraud.

No one can prevent the older sister making the DOV for her share of the will.

So the question is what are the legal issues for the non-executor OP and the two executor siblings?

I guess we can assume that all parties know what the older 'DOV' sister is planning - does this potentially make them accessories to any subsequent fraud on the part of the 'DOV' sister?

AnotherJoe

It would be very difficult for anyone to prove that the executors knew what the DoV sister was planning (do they "know" or merely suspect?) and I dont see why it makes them any more "accessories" than if older sister got the money and then used it to finance some other illegal act, say buying drugs. Say she had a drug habit, would they be accessories if they further enabled that by sending her money? 

If you give a beggar in the street money and you suspect it will be spent on drugs does that make you an accomplice.

I say give it to her or daughter depending when the money comes in and they receive the DoV,  and leave them to it.