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New Probate Question

including wills and probate
lockedout
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New Probate Question

#109698

Postby lockedout » January 11th, 2018, 10:02 pm

Bad form probably to post on an "old" thread, but as it is related, it seemed best.

My situation :

My brother died, intestate, over new year.

Only relatives, our mother and myself. (He never married or had children).

Net value of estate, probably about 15k but that is a bit of a guess at this stage.

Primary asset is a death in service benefit from pension scheme c. 30k ( I believe this pays out to his estate even in absence of a spouse)

Chattels of maybe upto 5k - but the cost of disposal might exceed the value.

Early days yet, but I found reference to a debt of c. 10k from a couple of years ago, I suspect most of this may be outstanding. It wouldn't take much more by way of other liabilities to render the whole estate to zero.

For this small amount I'm loath to spend a lot on solicitors if I can do it all myself.

The only ‘complication’ being that my mother would like to waive her inheritance rights.
> Her estate will ultimately be below the IHT threshold anyway.
> She does though want to transfer some money to me (for the grandkids) anyway, but is concerned about "depletion of assets" in the event that she needs care.
This last point may be moot in any case because the level of her private pension plus the freehold house will probably mean she gets no support in any case.
So three questions :
1. Do I need the help of a solicitor here, or is it DIYable?
2. Assuming the latter, once I have probate (or is it representation?) do I need to explain to anyone, other than my mother, what I do with the net proceeds?
3. Again assuming the answer to 2 to be no; does my mother need to legally document her waiver or can it just be informally agreed between us?

Grateful for any thoughts as it feels like this should be straightforward, but I don't want to make any stupid mistakes.

dionaeamuscipula
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New Probate Question

#109721

Postby dionaeamuscipula » January 11th, 2018, 11:44 pm

lockedout wrote:
Primary asset is a death in service benefit from pension scheme c. 30k ( I believe this pays out to his estate even in absence of a spouse)



It is highly likely that the death in service benefit is in a trust. The trustees will probably hold an expression of wishes form, but can pay out to whomever they wish (within reason). IIRC if this is the case the benefit sits outside the estate.

Definitely worth pursuing with the scheme administrator.

DM

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Re: Gaining probate - is it easy?

#109727

Postby Clitheroekid » January 12th, 2018, 12:11 am

lockedout wrote:So three questions :
1. Do I need the help of a solicitor here, or is it DIYable?

You don't need a solicitor - any reasonably intelligent and educated person can deal with a simple case like this. However, as your brother died intestate without a wife or children his estate would automatically pass to your mother. Consequently, if you wish to apply for a grant of letters of administration (the equivalent of probate where there's no Will) she would be the person entitled to make the application.

But if the main assets are bank / building society accounts you probably wouldn't need a grant anyway. For small amounts like this they will usually release the money if you sign a form of indemnity - basically it's an agreement to pay it back if someone with a better claim turns up.

It would obviously be sensible to try and find out whether the debt is still payable, though making a direct enquiry would obviously alert the creditor. Although the debt can be claimed against the estate your mother may decide to wait and see whether or not she's pursued for it. The creditor has 6 years from the date of death to issue court proceedings for its recovery.

If your mother does take out a grant it's a public document, and it would be easy for the creditor to trace her and demand payment. However, if no grant is taken out it would be a lot more difficult for them. I'm not advocating either course of action - it's for your mother to decide.
2. Assuming the latter, once I have probate (or is it representation?) do I need to explain to anyone, other than my mother, what I do with the net proceeds?

As mentioned above, the net proceeds belong to your mother, not you.

3. Again assuming the answer to 2 to be no; does my mother need to legally document her waiver or can it just be informally agreed between us?

As far as deprivation of assets is concerned it makes no difference whether she arranges a formal waiver (probably by way of a Deed of Variation) or just makes an outright gift. I can see no point in any formal process for such a small amount, so she may as well just give you the money.

Incidentally, although the point's been made, the money from the pension fund does not form part of your brother's estate, and the creditor is therefore unable to make a claim against it.

However, if your mother would rather some or all of it went to you - particularly if receipt of it might affect any benefits she's receiving - she should tell the pension trustees, as they may be willing to comply with her wishes.

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Re: New Probate Question

#109795

Postby mutantpoodle » January 12th, 2018, 10:51 am

we recently did similar and were definitely advised that by doing a deed of variation the 'assets are never received and as such are not 'given away' so no deliberate deprivation of assets can be claimed
of course all councils are using other peoples money so its unlikely they wouldnt try and claim even though they would lose!

why does your mum not DOV the funds directly to the grandchildren...why via you?

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Re: New Probate Question

#109802

Postby PinkDalek » January 12th, 2018, 11:15 am

mutantpoodle wrote:we recently did similar and were definitely advised that by doing a deed of variation the 'assets are never received and as such are not 'given away' so no deliberate deprivation of assets can be claimed ...


Other can give you chapter and verse but a deed of variation is ineffective for deliberate deprivation of assets purposes. Unless the amount involved was such that the means tested benefit limits were not exceeded.

Here's a random guide on the subject:

https://www.saga.co.uk/magazine/money/p ... meone-else

Who told you this and were there special circumstances such as a personal injuries award?

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Re: New Probate Question

#109881

Postby mutantpoodle » January 12th, 2018, 2:01 pm

solicitor who handled the IHT and probate issues
tax due was not affected

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Re: New Probate Question

#109901

Postby JonE » January 12th, 2018, 2:48 pm

PinkDalek wrote:... a deed of variation is ineffective for deliberate deprivation of assets purposes. Unless the amount involved was such that the means tested benefit limits were not exceeded.


Isn't this one of those topics which involve the grey area of 'intent'?

If, for example, the intent of a DoV is clearly IHT planning without any anticipation of a need for care provision then the DoV stands whereas if it is in contemplation of a probable need for care and eligibility for benefits then it would be 'looked through'?

The circumstances and notes of helpful evidence might be worth recording at the time of a DoV just in case there should be a challenge at some point. The same could apply to lifetime gifts but I'd have thought that, in either case, the donor retaining sufficient to put them well above the threshold for self-financed care would make a challenge less likely - and becoming even less likely with the passage of time.

Cheers!

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Re: New Probate Question

#109926

Postby PinkDalek » January 12th, 2018, 3:30 pm

JonE wrote:
PinkDalek wrote:... a deed of variation is ineffective for deliberate deprivation of assets purposes. Unless the amount involved was such that the means tested benefit limits were not exceeded.


Isn't this one of those topics which involve the grey area of 'intent'?

If, for example, the intent of a DoV is clearly IHT planning without any anticipation of a need for care provision then the DoV stands whereas if it is in contemplation of a probable need for care and eligibility for benefits then it would be 'looked through'? ...


I agree it is a matter of intent but I included "deliberate" deliberately, in so far as state benefits are concerned. This was in response to the assets are never received and as such are not 'given away' so no deliberate deprivation of assets can be claimed, which to me is mixing up the IHT situation with that for state benefits.

From the earlier link:

Tax and benefits

The other thing to be aware of is your mother’s entitlement to benefits and liability for contributions to care home fees. If she was ever assessed for either, the existence of the deed could be evidence of ‘deliberate deprivation of assets’, meaning the variation could be ignored and your mother assessed as if she had actually received the money.


A valid DoV stands for IHT purposes in any event, assuming all the boxes have been ticked etc.

PD
PS Did you have any views on DiamondEcho's queries over at Taxes. I was talking more about cessation than anything and thought you may have some knowledge in the area:

viewtopic.php?f=49&t=9398

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Re: New Probate Question

#110033

Postby lockedout » January 12th, 2018, 11:39 pm

Many thanks for all your pointers on this.

I had assumed that the death in service benefit paid out to the estate rather than direct to the benificiary. I shall have to follow this up with the pension scheme.

Having looked a little more closely,even without that the point on deprivation of assets is moot in this case - even once the new regime comes in, the value of the former family home, together with occupational pension will in any case mean that my mother gets no support with care costs and probably continue paying right up to the cap when it comes in (although I'm not sure how the calculations will work to establish a notional capital value to the occupational pension income?)

Anyway, so for the time being my issues become simpler. I can deal with the death in service benefit separate from the estate and the estate has a value that is either less than zero or at best minimal (unless there is anything I haven't found yet).

One question though : CK said :
Consequently, if you wish to apply for a grant of letters of administration (the equivalent of probate where there's no Will) she would be the person entitled to make the application.


My understanding was that whilst she had "first dibs" on this, that I could still apply to be the administrator so long as she does not?
Is this not the case?

The administrator does not have to be the same as the beneficiary do they?

My strong preference is that I am the administrator as I'll be doing all the leg work and presumably bodies may only be prepared to speak to the administrator (although I will pursue the avenue that you suggested of getting by with an indemnity. My brother also had some "assets" (probably a load of old junk was my mothers assessment) in a lock up and I'd certainly rather I dealt with that than her.

So thanks all, I'll start work on this avenue next week.

Just to answer one 'aside' question :
why does your mum not DOV the funds directly to the grandchildren...why via you?


Firstly because she wants me to actively manage the funds and secondly because she wants me to choose the appropriate 'life-changing' moment to release the funds for constructive use (I think she fears that a 'big' sum at a young age might get squandered on liquor and wild women / men - I really cannot imagine where she gets such a wild notion from :o :o :o :o :o :o )

I know that this approach does carry an IHT risk and there might be other means to achieve the same result (my estate will carry that burden), but this seemed the simplest expedient , albeit with risk.

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Re: New Probate Question

#110104

Postby mutantpoodle » January 13th, 2018, 10:26 am

the info I (we) were given was indeed geared towards an IHT situation since solicitor was well aware how much IHT we just paid and was at pains to help us avoid making same mistake as parents...so miss a generation
naturally in conversation he added that such action would also mean no deprivation of assets, however that is unlikely to ever be an issue
(we never qualify for anything).......(we do get heating allowance!!!!!)



its not clear how old the grandchildren are but is it not possible for the bequest to be held in a bare trust and therefore managed by the self (lockedout)??

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Re: New Probate Question

#110107

Postby JonE » January 13th, 2018, 10:31 am

PinkDalek wrote:I agree it is a matter of intent but I included "deliberate" deliberately, in so far as state benefits are concerned. This was in response to the assets are never received and as such are not 'given away' so no deliberate deprivation of assets can be claimed, which to me is mixing up the IHT situation with that for state benefits.


I take your point. The specific context is all-important as what may be valid in one context does not necessarily hold true in the other.

Cheers!

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Re: New Probate Question

#110322

Postby Clitheroekid » January 13th, 2018, 10:51 pm

lockedout wrote:One question though : CK said :
Consequently, if you wish to apply for a grant of letters of administration (the equivalent of probate where there's no Will) she would be the person entitled to make the application.


My understanding was that whilst she had "first dibs" on this, that I could still apply to be the administrator so long as she does not?

It's not just a question of her not making an application. If she doesn't want to take out a grant she has to make a formal `renunciation' of her right in writing.

The right to apply then passes to the next in priority, i.e. the children. As you're the only surviving child you would then be able to make the application.

... the estate has a value that is either less than zero ...

You need to be extremely careful if the estate is potentially insolvent. There are very strict rules about how an insolvent estate must be administered, and if you get it wrong you can incur personal liability to the creditors.

Quite frankly I would never advise someone to try to undertake this task. Not only is it an utterly pointless exercise, as you are working for nothing for the benefit of the creditors, but it also carries a high degree of personal risk.

I really can't see any point in taking out a grant at all in this situation, but if you're determined to do so you must determine whether or not the estate is or is not insolvent before you go ahead. And if it is (or looks as though it may be) I'd strongly advise that you obtain competent professional advice. Professional charges can be deducted as a first priority from the estate assets, so it shouldn't cost you anything.

Alternatively, unless you have decided to pay back the large debt anyway, you could administer the estate `informally', obtaining payment from the banks etc on the indemnity basis and choosing which creditors to pay. However, you would obviously have to bear in mind the risk that if you don't pay off the large debt the creditor may seek to recover payment from you personally.

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Re: New Probate Question

#110410

Postby lockedout » January 14th, 2018, 3:03 pm

Excellent as ever CK thank you .

At first reading I didn't think it looked too difficult treating the creditors in the correct order etc.

But I'm going to give your advice the respect it deserves and take it. Over to the professionals it will be.

This though gives me three (and a half) immediate questions.

1. Physical Assets.

There are no 'big ticket' items, but I wonder how in depth and forensic any assessment will be. I have already made arrangements for my brothers clothes to be collected by a charity - a fairly large volume, but no Prada or Guchi, the whole lot might fetch a couple of hundred quid on a good day at a jumble sale - should I put this collection on hold?


2. Cash assets (and liabilities).


I had planned to contact on Monday all of the potential source of cash assets to inform them to freeze them and to ask for a value. Should I proceed with this or await engaging the legal advice?
Similarly should I delay contacting the creditors? (That's my half a question!)

3. Location of legal advice.

I live in Kent (and am just on my way back there), my mother and brother in the Midlands.

Although I expect to be travelling backwards and forwards regularly over the next few weeks and months, from a practicality (and immediacy as I need to be at home for at least the next 4 days) it would be easier for me to engage legal advice in Kent. But would it make more sense to engage someone locally to 'the estate'?

Especially as physical assets seems to me to be the only possible complication here. (I think I mentioned earlier in the thread that my brother had a self storage facility - I haven't been able to gain access to it yet, but there is remote possibility that there is some small realisable value here).

Grateful for any further advice you or anyone else can give here. Otherwise I think my first port of call on Monday morning will be to contact my local (Kent) solicitors and pose these same questions.

Huge thanks again!

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Re: New Probate Question

#110417

Postby lockedout » January 14th, 2018, 4:17 pm

As an (off topic) aside that I hope I’ll be excused, I noted CK’s point
unless you have decided to pay back the large debt anyway,


Bearing in mind that I started from the belief that the pension payout would be part of the estate and that the proceeds would therefore be net of the debt, this is absolutely something I have considered as the honourable course of action. However ……

The major debt is a credit card with a major high street bank and I find that my brother sought advice in 2012 from the CAB (sadly I do not believe he took that advice) when that debt was c. £2,500. So to find that the same debt is not c. £11,000 I am somewhat alarmed.

Now do not get me wrong, I am no believer in the ‘nanny state’ . But having worked with people with debt issues in the past (and in hindsight having probably been there myself at one time) I understand that they are often vulnerable and make poor choices – specifically those poor choices that they are allowed or encourage to make by large or unscrupulous organisations.

So I would dearly like to know (but suspect I never will) how a problem debt was allowed to escalate four fold, to a level that was approximately equal to a years take home pay of someone with no material assets.

Was it due to :

1. Reckless or abusive lending policies?
2. Exhorbitant and unrealistic default charges?
3. Irresponsible behaviour and financial management by my brother (yes I do not discount this)?

Quite possibly all three.

On reflection I conclude therefore that the honourable course of action is probably NOT to make a ‘charitable donation’ to this high street bank.

I am motivated though on the back of this to get back involved in voluntary work with the Credit Union sector and possibly to make a donation to a debt management charity. (Maybe not to the full amount saved – bearing in mind that my kids rather then me will be net benificiaries and it would be inappropriate for me to enforce their generosity!)

I actually used to be a shareholder of the bank in question up until quite recently but then they failed (or is that passed?) my moral reprehensibility filter (having also done so a few decades past) on an entirely different issue.

Leopards and spots – I’ve never quite believed that, but perhaps I should.

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Re: New Probate Question

#111779

Postby lockedout » January 18th, 2018, 11:14 pm

A new development on this, or in fact pretty much back to the start as far as I can see.

We now have the claim forms and guidance notes from the occupational pension and it includes this

may be able to pay a lump sum on death to the personal representative(s) of the deceased, to be included as part of the member's Estate, or to someone else if the deceased nominated them to receive it


As far as I am aware my brother made no such nomination, so it seems pretty categoric that in fact this will go into the estate and consequently the estate will actually not be insolvent (assuming the sum is released and is indeed the amount that I believe it to be).

Unless anyone knows anything different that might influence this?

Thanks to all anyway for your help.

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Re: New Probate Question

#111783

Postby Clitheroekid » January 19th, 2018, 12:43 am

lockedout wrote:
may be able to pay a lump sum on death to the personal representative(s) of the deceased, to be included as part of the member's Estate, or to someone else if the deceased nominated them to receive it


As far as I am aware my brother made no such nomination, so it seems pretty categoric that in fact this will go into the estate and consequently the estate will actually not be insolvent (assuming the sum is released and is indeed the amount that I believe it to be).

Unless anyone knows anything different that might influence this?

That doesn't seem to make sense, and I wonder if it's just sloppy wording.

The normal reason these benefits don't count as part of the estate is that the pension trustees have discretion as to whom they pay the benefits. Because nobody has any contractual right to receive them they can't be considered as an asset of the estate as the executors have no means of enforcing payment.

The use of the word "may" reinforces my view that what they are trying to say is that in the absence of a nomination they may simply decide that the benefits should be paid in accordance with the deceased’s Will, or in the absence of a Will then in accordance with the Intestacy Rules.

However, I would again emphasise that this is a discretionary decision, and the only reason they're distributing the estate in that way is that they think that’s what the deceased would have wanted.

If I'm correct, then it does not mean that paying in this way changes the legal status of the benefits from being outside the estate to being part of the estate.

But it's an arcane area of law, and by definition one that we rarely have any involvement with simply because these payments are usually irrelevant to the probate process.

I would therefore strongly recommend that you speak to the company involved and clarify 100% that the benefits do not and will not form part of the estate irrespective of how they decide to distribute it. And if so, ask them to confirm it in writing.

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Re: New Probate Question

#111850

Postby lockedout » January 19th, 2018, 11:49 am

Thank you again CK,

I've actually decided to bite the bullet & engage a local solicitor to help on this (and probably do the "leg work" as well), so I'll make sure he understands the point - I've already stressed to him that the destination of that payment is the tipping point between solvency and insolvency.

I can think of any reason not to disclose it, so if I say this the NHS pension scheme - I wonder if that triggers any thoughts/experiences from anyone?

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Re: New Probate Question

#111889

Postby lockedout » January 19th, 2018, 1:40 pm

Sorry -me again!

I've just found something else in the additional guidance notes in the section on Lump sum on death benefit it says :

The NHS pension scheme is not [my bolding] a discretionary scheme.


It then goes on to re-iterate the order of priority including the statement that in absence of ,,,, it will be paid to the member's Estate.

Based on what you'd said I think that does confirm that it will in fact go to the estate? Or is there still the potential for this to be loose wording?

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Re: New Probate Question

#111910

Postby Jabd2001 » January 19th, 2018, 4:22 pm

You may have found this already, but googling found the NHS Pensions Survivors Guide, which seems to confirm that if there is no nominee, the payment is to the estate. It also states that you need probate for the funds to be released, if the payment is more than £5k. I hope the solicitors fees are reasonable and that there is money left after the debt and fees are paid!

I’m sorry for your loss, it sounds like a sad story.

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Re: New Probate Question

#111911

Postby Jabd2001 » January 19th, 2018, 4:24 pm

Would it be worth asking NHS pensions yourself rather than paying the solicitor to do so? I imagine they have a decent department looking after death benefits?


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