Distributing estate early

Jowwie

https://forums.moneysavingexpert.com/discussion/comment/82137526#Comment_82137526

I think the 6 year cut off for recovery of benefit overpayments is whilst someone is alive. After death there is no such cut off so the state can go right back to the beginning of a claim. It can be hard to get any bank statements going back that far!

I have experience of a recovery going back 20+ years resulting in a five figure repayment. It took 18 months to get an amount out of DWP even though we were not disputing the recovery and actively trying to provide information to them. I think they can fine in addition to recovering the overpayment although that did not occur in this case. Recollection that a DWP letter stated that the estate should not be distributed until they have completed their investigations. I just quoted that to all the beneficiaries and that they had to wait. None of them were in any hurry for the money though which helped.

Regalia6969

https://forums.moneysavingexpert.com/discussion/comment/82138126#Comment_82138126

You are describing my nightmare scenario, I'm sorry you went through that. I think typical bank statements only go back 7 - 10 years as the banks destroy financial history before that point.

I was hoping my 20 year safety net was being overly cautious. Would you mind if I asked the details of your case? For mine its a £14 a week pension savings credit, I actually have no idea how far back the claim goes though.

Technosaurus

https://forums.moneysavingexpert.com/discussion/comment/82138271#Comment_82138271

Hi @Regalia6969 , keeping everything crossed for you here!

Sorry to chime in again, but if it's £14 a week over 20 years then that's £15k, which I note was the amount you said you'd keep as a residual fighting fund.

As a rule of thumb from a previous job - if there were any outstanding liabilities or loose ends, we used to calculate what we thought it was then double it, treble if it was taking a long time to get info back. So you might want to think about keeping substantially more back just in case…

poseidon1

Just an observation OP, is it reasonable to suppose the DWP's potential claim could not only wipe out estate residue but then go on to impact on the £17,000 pecuniary legacies? That is to say do you genuinely believe the DWP claim could make the estate insolvent?

I don't think I made it clear that pecuniary legatees are paid first in preference to those entitled to residue, so unless you can reasonably present a case to the pecuniary legatees that some or all of their legacies maybe needed to meet the DWP claim, you have no grounds to withhold their entitlements any longer- see the order of estate disbursement below -

https://withfarra.co.uk/guides/what-is-a-pecuniary-legacy

In short you cannot treat pecuniary legatees the same as those entitled to residue and expect them to wait in line. As already stated , as of now those fixed legacies are also increasing by way of statutory interest accruing daily with such interest payable out of estate residue.

Jowwie

Your case sounds much more straight forward than mine was. It was relating to full pension credit and additional benefits claimed around that.

The deceased had complex mental health issues. Deemed to have capacity and kept their finances private. Many years ago they ran a business. It went bust and they subsequently had a breakdown. There were some small pension pots associated with that business on which the deceased never drew funds. I think because of the trauma they went through when the business collapsed they did not want any reminder. Financially this decision made no sense whatsoever. Over the years those pots grew, not massively, but over pension credit thresholds. Still nothing was withdrawn.

There was also an additional recovery by DWP which was repaid some years ago, whilst the deceased was alive. I think (although not certain because the relative would not tell me) this was due to still claiming some married allowance years beyond when they had divorced. One would have hoped that this would have put the relative on the radar with DWP to scrutinise any future claims but that was not the case. Several hospital stays they returned home with benefit increases!

I have seen a number of posts on here mentioning "assessed income period" with historical pension credit claims that started before 2016. If your relative had one of those done then you might find nothing is due in your case. Fingers crossed for that!

Original post with my case ...

https://forums.moneysavingexpert.com/discussion/6487517/more-on-delays-but-not-just-probate/p1

Regalia6969

https://forums.moneysavingexpert.com/discussion/comment/82138558#Comment_82138558

Thanks @Technosaurus !

That was my calculation, the actual amoung increased over time to that amount (their PC was £11 p/w in 2021 for example) but again it was a safety net estimation. Thank you for the advice, praying it isn't as high as triple or quadruple that number 😬

Regalia6969

Thanks @poseidon1

No it wouldnt (or shouldnt 🙏) make the estate insolvent, thank you for drawing my attention to this. I'm in my late 20s doing all this for the first time and entirely off my own back, I didn't realise how many pitfalls there were. My assumption was pecuniary legaties could be made to wait in lieu of remaining debts on the estate to be settled first but sounds as if I should just settle it now to be on the safe side.

Regalia6969

Thank you @Jowwie

I actually think I read your thread before, your name seemed familiar!

Basically for me the deceased always hovered just under the 16k cutoff for savings credit in their bank funds, as they withdrew weekly cash for much of their expenditure. However by the time they died they also had 10k in cash saved up set aside which I believe was accrued over the last 2 or 3 years before death specifically for funeral costs etc as they had a terminal illness. Its that 10k that I'm afraid of and what the DWP will make of that as I don't think it was ever declared. Her cash withdrawals noticably increased at that 2-3 year period which I hope they will take as the clearest explanation and be somewhat kind about it.

As far as I know she only received savings credit (e.g. £11 p/w in 2021, increasing year to year, to £14 p/w in 2025. She had it before 2021 but thats my oldest statement record.) I have no idea if she had an assessed income period... I thought they were phased out even for old claims. Do you know if there's a way to find out? Contacting DWP for example.

Apologies for wall of text.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82138711#Comment_82138711

Given your very young age, I absolutely applaud the efforts you have made in handling matters many people much older than you would find very challenging. At least you have reached out for guidance when a lot of others muddle through as best they can.

You are absolutely right there are a great many traps and pitfalls as well as advantageous opportunities for tax mitigation in dealing with deceased estates and although they are books available to assist the DIY executor , it is a potentially vast subject to approach with no prior experience.

As for not knowing pecuniary legatees have priority when it comes to estate distributions, you can gurantee this is not commonly understood by many DIY executors, so no shame in that regard.

Don't forget to do your interest calculations. Your legatees will have no idea interest is due, but it is a statutory requirement that you pay them what is due. It is paid gross, and you advise the legatee that the interest they recieve is taxable and should be notified to HMRC for personal tax purposes. Beyond that you have no other duties with regard to those legacies.

Regalia6969

https://forums.moneysavingexpert.com/discussion/comment/82138748#Comment_82138748

Thanks again @poseidon1 and for your kind words. The estate has fallen well under the IHT so I made the mistake of thinking it would be simple! That'll teach me... although still much simpler than having to deal with the alternative I bet.

I'd be interested to know your thoughts on my latest reply message to Jowwie where I've listed some more details of this specific case, if you have any in particular that is and the time to share. Cheers again.