Deprivation of Assets

[poorthing]

Hi,

My brother passed away suddenly in tragic circumstances. He was single, never married, no children. He has not left a Will. The next of kin are his elderly parents (Mum and Dad). They don't want any of the inheritance mainly given the circumstances he passed away in. Inheritance money is roughly around 160k in total ( which is mainly equity in a flat he has, bank still owns it as mortgage is not paid off). They would like it to be passed to the 2 brothers /grandchildren by deed of variation. We (2 brothers) are about to start the Grant of probate and will be the executors.

However, Mum and Dad are on means tested benefits (pension credit, housing), live in a council flat. They are now old and frail (85 and 91). Dad has recently (2 months ago) started to have carers visit twice a day as he was not well. He is not yet at the point where he needs to go into a home. The Council recently did a 'Financial Assessment form' (nothing of my brother's money was included as we had not started the Grant of probate at the time and he had just passed away). Dad has now been informed that he will have to pay a little towards his care.

We are about to start the Grant of probate and spoke to a solicitor about our situation and in particular as to whether mum and dad can pass this money to us given the above circumstances. We are most concerned as to whether this will be ' Deprivation of assets'. The solicitor seems to think that it is not as he seems to say that if you do the 'deed of variation' then they cannot be deprived of the money as my parents never possessed it in the first place.......

1) re: Deprivation of assets - Would this what the solicitor says be correct? We don't want to do anything that is not legal.
2) Should we go and seek a second opinion from another solicitor in this regard?

We will actually need to sell the flat so it will take some time in today's market to get the actual money .....but am thinking and planning ahead and am confused about our situation. Please help.

[UncleEbenezer]

The Council recently did a 'Financial Assessment form' (nothing of my brother's money was included as we had not started the Grant of probate at the time and he had just passed away).

I'm not a lawyer, and certainly can't answer your question. But I've recently been through some of the same processes you're dealing with, and one thing sticks out.

You probably did the right thing in excluding that money pre-probate. But they seemed to me very clear: you must inform them of any change of circumstances. That looks like the kind of thing they'd take a very dim view of if you fail to inform them.

The solicitor seems to think

If you have qualified legal advice (and with £160k in play, that makes sense), why are you asking here? I'd be inclined to get a written opinion[1] and regard that as firm evidence of Due Diligence. Asking here might get you a qualified opinion but will surely count for much less if queried!

[1] An unwritten one might too easily be subject to misunderstanding or misrepresentation.

[Lootman]

The Council recently did a 'Financial Assessment form' (nothing of my brother's money was included as we had not started the Grant of probate at the time and he had just passed away).

I'm not a lawyer, and certainly can't answer your question. But I've recently been through some of the same processes you're dealing with, and one thing sticks out.

You probably did the right thing in excluding that money pre-probate. But they seemed to me very clear: you must inform them of any change of circumstances. That looks like the kind of thing they'd take a very dim view of if you fail to inform them.

My instinct is the same. This might look to the local authority like an attempt to deliberately impoverish themselves for the purpose of gaining a benefit.

I would want a much more solid basis to do this than a solicitor who appears to not be too sure about it.

[chas49]

A quick Google search (https://www.google.com/search?q=deed+of ... +of+assets) suggests your solicitor may be wrong. One of the search results reports a recent Court of Protection ruling which did allow a deed of variation in such a case - however it seems that this hinged on the intention of the deceased on leaving assets in his will. In the absence of a will, it seems less likely that anything could be inferred as to the deceased's wishes.

Bear in mind though that a DoV would still be effective in terms of IHT if that's a factor.

Definitely get proper written advice from a solicitor specialising in such matters. https://www.step.org/about-step/public might be a place to look.

[monabri]

https://www.willans.co.uk/knowledge/dee ... -use-them/

" However, in some circumstances, a deed of variation will not be appropriate. For example:

To avoid care fees. If a deed of variation has been entered into when care was already being received or if it was foreseeable that care might be needed in the future, then diverting inheritance elsewhere may be seen as a deliberate deprivation of assets by the local authority. If it is found to be a deliberate deprivation of assets then it may be disregarded and fees still charged or the person receiving the inheritance may be made to pay for the care fees in future."

Based on your parents age and history and what you say...Sounds like the Local Authority (LA) would have a strong case!

Another search:

https://hklaw.uk/services-for-you-2/del ... of-assets/

"If the LA can prove that a resident has deliberately deprived themselves of an asset, avoiding care home fees, under such circumstances then they are able to take the following action:

Treat the resident as still retaining the asset that has been given away (known as having ‘notional capital’)
Recover the value of the asset from the person receiving the gift
Initiate proceedings under the Insolvency Act 1986 to declare the resident bankrupt, which can mean that any transactions made within the last 5 years can be set aside
Apply for a judgement debt in a County Court"

[CliffEdge]

Without a will it will be Letters of Administration. This link may be useful:

https://www.gov.uk/inherits-someone-dies-without-will

[poorthing]

Hi,

Thanks to everyone for your detailed replies. I will look more into it and get something in writing from the solicitor as suggested. In case we don't do the Deed of variation:

1) Can the money then be put in a discretionary Trust? Would the local authority / DWP allow this and accept this?
2) Would the money be protected in case of challenge from the local authority or DWP?
3) Any rough idea of the costs involved to put this money (around £160000) into a discretionary trust?
4) Essentially, I am just trying to ascertain it it's worth putting this amount in a discretionary trust or is it too small an amount to be put in a trust (given the costs involved).

Thanks.

[monabri]

Hi,

Thanks to everyone for your detailed replies. I will look more into it and get something in writing from the solicitor as suggested. In case we don't do the Deed of variation:

1) Can the money then be put in a discretionary Trust? Would the local authority / DWP allow this and accept this?
2) Would the money be protected in case of challenge from the local authority or DWP?
3) Any rough idea of the costs involved to put this money (around £160000) into a discretionary trust?
4) Essentially, I am just trying to ascertain it it's worth putting this amount in a discretionary trust or is it too small an amount to be put in a trust (given the costs involved).

Thanks.

Sounds like an attempt at deprivation of assets to avoid having to potentially pay care costs.. Doesn’t the very fact that you are looking to move the money away support this? I'd seek professional advice but I'd expect it won't be what you want to hear.

[scrumpyjack]

Hi,

Thanks to everyone for your detailed replies. I will look more into it and get something in writing from the solicitor as suggested. In case we don't do the Deed of variation:

1) Can the money then be put in a discretionary Trust? Would the local authority / DWP allow this and accept this?
2) Would the money be protected in case of challenge from the local authority or DWP?
3) Any rough idea of the costs involved to put this money (around £160000) into a discretionary trust?
4) Essentially, I am just trying to ascertain it it's worth putting this amount in a discretionary trust or is it too small an amount to be put in a trust (given the costs involved).

Thanks.

I can't see any point in a discretionary trust. It simply adds cost and hassle.

I agree with other posters that you need written advice from a solicitor that a DOV to redirect the assets from the default intestacy beneficiaries to the younger relations does not amount to a deprivation of assets. IANAL but he might be able to come to this view on the basis the deceased would have wanted his assets to go to the younger relations but had not got round to doing a formal Will.

If you obtain such a letter, I think you have a reasonable basis for not informing the LA.

[Clitheroekid]

We are about to start the Grant of probate and spoke to a solicitor about our situation and in particular as to whether mum and dad can pass this money to us given the above circumstances. We are most concerned as to whether this will be ' Deprivation of assets'. The solicitor seems to think that it is not as he seems to say that if you do the 'deed of variation' then they cannot be deprived of the money as my parents never possessed it in the first place.......

1) re: Deprivation of assets - Would this what the solicitor says be correct? We don't want to do anything that is not legal.

I'm afraid the solicitor is 100% wrong. This is a situation that crops up regularly, and I've come across it in several estates I've dealt with. I've also researched the point thoroughly, and there is no doubt at all that a DoV amounts to deprivation of assets.

This is because the whole essence of a DoV is that the person diverting their inheritance has already notionally received it. Consequently, the DoV is a form of gift, and that amounts to deprivation of assets.

2) Should we go and seek a second opinion from another solicitor in this regard?

If you can get the original solicitor to confirm his advice in writing then there's no need! You're entitled to act on written legal advice, so why on earth would you want to seek out an opinion that might be accurate but disadvantageous, when you can rely on an incorrect one to your family's advantage?

[mc2fool]

2) Should we go and seek a second opinion from another solicitor in this regard?

If you can get the original solicitor to confirm his advice in writing then there's no need! You're entitled to act on written legal advice, so why on earth would you want to seek out an opinion that might be accurate but disadvantageous, when you can rely on an incorrect one to your family's advantage?

And then when the council finds out, declares it is deprivation of assets and gets a court to back that, then the OP/their parents sue the solicitor?

[stewamax]

I concur with CK, if for no other reason that a beneficiary has to overtly disclaim their legacy via a DoV, i.e. they must make a positive declaration.
This declaration would be construed as a deprivation.

As an aside, it would be intriguing to see if a potential legatee who persuaded an as-yet-living testator to amend their Will to exclude them could later be held to have deprived themselves of assets ....

[Lootman]

I concur with CK, if for no other reason that a beneficiary has to overtly disclaim their legacy via a DoV, i.e. they must make a positive declaration.
This declaration would be construed as a deprivation.

As an aside, it would be intriguing to see if a potential legatee who persuaded an as-yet-living testator to amend their Will to exclude them could later be held to have deprived themselves of assets ....

Something like this can happen with bankruptcy. If you are an undischarged bankruptee and you are aware that you might soon get an inheritance, you might deem it prudent to try and divert or delay that bequest since, effectively, it would go to your creditors and not to you. After the bankruptcy is discharged, your debts are dead and you can freely inherit.

I believe that is also difficult to pull off although perhaps a trust to hold your bequest where you have no direct influence over it might pass muster.

[DrFfybes]

I concur with CK, if for no other reason that a beneficiary has to overtly disclaim their legacy via a DoV, i.e. they must make a positive declaration.
This declaration would be construed as a deprivation.

As an aside, it would be intriguing to see if a potential legatee who persuaded an as-yet-living testator to amend their Will to exclude them could later be held to have deprived themselves of assets ....

I agree - it seems obvious to me they are diverting money from themselves in the same way as if they had won it or earnt it and asked the payment to go elsewhere. It was their moey, they chose to gave it away.

These guys agree
https://www.willans.co.uk/knowledge/dee ... -use-them/

On the latter aside, no deprivation would have occurred, as they were never entitled to the assets. Now if you had a winning lottery ticket and gave it away after the draw but before you checked the numbers, would that count

[Lootman]

On the latter aside, no deprivation would have occurred, as they were never entitled to the assets. Now if you had a winning lottery ticket and gave it away after the draw but before you checked the numbers, would that count

The rule is not "deprivation of assets" but "deliberate deprivation of assets".

So if you give away assets for some other reason, and when you had no reasonable expectation that you would need care in the foreseeable future, then you should be OK.

[Clitheroekid]

If you can get the original solicitor to confirm his advice in writing then there's no need! You're entitled to act on written legal advice, so why on earth would you want to seek out an opinion that might be accurate but disadvantageous, when you can rely on an incorrect one to your family's advantage?

And then when the council finds out, declares it is deprivation of assets and gets a court to back that, then the OP/their parents sue the solicitor?

Exactement! Any solicitor who's too lazy to check a simple legal point before giving (paid for) advice frankly deserves to be sued.

[monabri]

Any thoughts on the use of "Annual Exemption" with a view to reducing the £160k figure down ?

(it's a long way to get down to £16k but it might save 'poorthing"'s family £18k).

[monabri]

Has 'poorthing' looked into claiming attendance allowance for his Dad? Attendance allowance is not means tested.

[mc2fool]

And then when the council finds out, declares it is deprivation of assets and gets a court to back that, then the OP/their parents sue the solicitor?

Exactement! Any solicitor who's too lazy to check a simple legal point before giving (paid for) advice frankly deserves to be sued.

Yeah, but suing the solicitor would involve a large amount of faff and aggravation (and probably cost) and won't help with the situation with the council and the loss of means tested benefits and/or need to pay more for care costs, so won't be a win overall and will probably end up with a lot of grief for the 85 and 91 year old parents.....

[Dod101]

On the original point, surely the parents must have the money or unencumbered entitlement to the money before they can sign any Deed of Variation.
Thus, such a Deed could only be seen as an attempt at Deprivation of Assets as far as the LA is concerned. That seems entirely logical to me.

Dod