I wonder if anyone has managed to discover the DWP’s settled position on this at present - I’d appreciate your thoughts and the below fact pattern:
D passed in July 2019, and we were instructed by her sole executor and son (who is also the majority residuary beneficiary) to deal with the administration of her Estate that same month. We notified DWP of D’s passing promptly upon receipt of the death certificate in September 2019 and placed S27 Trustee Act notices which expired in mid January 2020.
We chased responses from DWP to our notifications in October 2019 (in writing), December 2019 (by telephone), January 2020 (by email), and February 2020 (by telephone). I then chased again by telephone this month and was directed to read the below (and quite opaque) press release:
This states that legacy overpayments are temporarily suspended for three months, it appears from the date of the press release being 3 April 2020.
I was advised in February that there were post death overpayments of £573.40 on DLA65+ and £447.04 on SRP. These “were to be referred to Debt Management / Recovery From Estates”.
Am I justified in now writing to DWP to state that, as the Estate has been fully administered excepting these elements, that we intend to fully distribute the Estate at this stage and consider that they should write any debts off as a gesture of goodwill, or should I distribute subject to a retention of £1,020.44 being to sum of the advised but as yet un-demanded liabilities to DWP?
Obviously subject to PR’s instruction, but I would like to advise appropriately.
If the DWP has already advised that there was an overpayment of benefits, you are already on notice of the claim.
s.27 notices only protect the personal representative or trustee if they distribute without knowledge of the claim.
I suggest sufficient funds should be retained to cover the DWP’s claim (and any associated costs dealing with it). If the executor insists that all funds be paid over to them, I suggest they should be apprised of the fact that the liability remains outstanding and require them to sign an acknowledgement that they are fully aware of this and confirm they will hold monies available to discharge that liability upon demand. This may be a protection for the firm if the DWP seeks to pursue the matter and the executor fails to pay up. Should the executor decline to give you such an assurance, you might form your own view of their intentions.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Many thanks Paul. It’s good to have the view of a fellow practitioner - certainly one that accords with my own in relation to the distribution - I have proceeded along that route and advised the PRs accordingly.
It will be interesting to see how the “suspension” of recoveries pans out in due course. One might imagine that the Exchequer’s cupboards may be a little bare and in need of re-stocking, although they may take a cost:benefit view on recoveries.
Unfortunately DWP has been somewhat dilatory for some time now in this respect. It is not unusual to receive a claim for an overpayment several months after the death. They send these to us as the extracting solicitors even though our instructions were limited to obtaining the grant only. I then have to forward the correspondence to the executor who hopefully has not distributed the estate. I always advise clients to check bank statements to make sure that there has not been a payment credited since the date of death.
I’ve progressed this matter by preparing final Estate Accounts which I provided to the PR for approval subject to:
(a) a retention of funds to cover the verbally advised referred overpayment, and
(b) distributing to all restructure beneficiaries with a line confirming that this distribution could be subject to a clawback.
I would however argue that DWP be estopped from claiming any greater amount than the value verbally advised given that we have acted on this information on good faith and Section 27 Notices expired several months ago at this stage (they were placed late last year).
My understanding is that a creditor merely needs to give notice of a claim - they do not need to quantify the liability.
If the claimant does sustantiate their claim within a reasonable period, I believe the personal representative (PR) can apply to court for an order requiring the claimant to do so, failing which the PR may distribute the estate without regard to the claim (an “Unless” order, sometimes referred to as a Fitzhugh Gates order). In the absence of such an order, the PR remains liable for the debt. Unless the sum involved is significant, though, the cost of such an order would be disproportionate.
In the instant case, I doubt the DWP would agree the value of its claim should be limited by the phone call, and the costs of entering into a dispute could exceed the difference.
I would also be wary of distributing to the beneficiaries subject to a clawback as if, for whatever reason, any do not pay up, who will have to make up the shortfall? Even if some are charities, in the present circumstances many are experiencing financial difficulties and might be unable to satisfy any clawback request. I therefore suggest a retention be made to cover the anticipated liability (plus a margin for error!).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I just chased the DWP for a payment in to the estate dating back to August 2019, which noted on preparing final estate accounts had never been received. They confirmed they were only dealing with urgent matters but when they realised the date of my correspondence, he said he would get someone to look at it. That is slow.
It’s interesting that they (DWP Recovery from Estates) still have some staff working on matters of this nature. Could you please advise if you chased by email, telephone or written correspondence?
My secretary has had a complete lack of success in raising anyone of assistance by telephone.
Resubmission of earlier posting, with word missing from the original highlighted.
Apologies for the omission
My understanding is that a creditor merely needs to give notice of a claim - they do not need to quantify the liability.
If the claimant does NOT sustantiate their claim within a reasonable period, I believe the personal representative (PR) can apply to court for an order requiring the claimant to do so, failing which the PR may distribute the estate without regard to the claim (an “Unless” order, sometimes referred to as a Fitzhugh Gates order). In the absence of such an order, the PR remains liable for the debt. Unless the sum involved is significant, though, the cost of such an order would be disproportionate.
In the instant case, I doubt the DWP would agree the value of its claim should be limited by the phone call, and the costs of entering into a dispute could exceed the difference.
I would also be wary of distributing to the beneficiaries subject to a clawback as if, for whatever reason, any do not pay up, who will have to make up the shortfall? Even if some are charities, in the present circumstances many are experiencing financial difficulties and might be unable to satisfy any clawback request. I therefore suggest a retention be made to cover the anticipated liability (plus a margin for error!).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals