Client Case Study: Inheritance and losing benefits

20/05/19

Our client is the executor of a friend's estate. He has dealt with the estate including the sale of a property and the balance remaining is just over £90,000 to be shared equally between the deceased's son and daughter as per his will.

The executor is finalising the estate and made out two cheques for them. The deceased's son cashed his but the daughter hasn't and has said she doesn't want the money because she will lose her benefits. She asked our client to give it to her brother’s children, but her brother said he didn’t want them to have it.

Our client wants to know what is his legal position -is he allowed to give it to anyone he or the daughter wishes? Does he have to give it to her? 

Advice

An executor must distribute the estate in accordance with the Will and failing to do so could mean he is personally liable for any money incorrectly distributed. The executor has taken the correct steps by informing the beneficiary of her entitlement. 

However the beneficiary is not obliged to accept an inheritance and she has two options: to "disclaim" the inheritance - meaning her share will pass to the next person entitled in the Will or to sign a "Deed of Variation" - which is where (usually within two years of the person's death) a beneficiary varies her entitlement and redirects it to whoever she chooses.

The beneficiary should take her own advice about how which option is the best for her benefits. The general position though  that is that the law is unclear as to how these options affect her benefits. Disclaiming her inheritance entirely is not a case of her receiving money then transferring all her interest to another person, so is less likely to be considered as a deprivation of capital allowing her to retain her benefits. Whereas a Deed of Variation in which she directs who receives her share (so she has authority over it) could be seen as a deprivation of capital by the Department for Work & Pensions (DWP) which could result in them assessing her as still having the money and therefore withdrawing her benefits.

The executor should demand confirmation of  which option she is pursuing. It is arguable that should the daughter refuse to accept payment or fail to co-operate, her conduct could amount to a disclaimer thereby allowing him to distribute the money in the way described above bringing the matter to a close.

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