Deed of Variation and Deprivation of Assets

I am acting for the Executors in the administration of the estate where a beneficiary (B) has informed me that she is in receipt of means-tested benefits. B has already asked me to prepare a DOV so that her entitlement would pass to her daughter and I declined to act as I believed it would be a deprivation of assets.

B has now informed me that she is instructing someone else to prepare a disabled trust (I have no idea whether she satisfies the criteria for a disabled person’s trust) and wants a DOV prepared so that her inheritance will pass into the trust. Do forum members know whether a DOV to redirect B’s inheritance into a disabled trust would also be deemed to be a deprivation of assets?

In the event that the trust and DOV are acceptable, can the Executors refrain from entering into the DOV, even though no legacies have been paid out of the estate yet, as I do not think that the IHT position of the estate will be affected. What do forum members think?

Claire Carr
Rexton Law LLP

The executors are not required to be a party to the variation unless it
gives rise to additional IHT and they have sufficient assets in their
possession to satisfy that additional liability.

Whether or not the executors view the variation as “deprivation” does
not affect the validity of the assignment of the beneficiary’s interest.

That the beneficiary is asking you to draft the variation suggests those
advising her are not appropriately qualified or, if they are, why are
they not drafting the deed?

Unless the trust is to be a bare trust, I believe settlement of the
entitlement will be deprivation, as the beneficiary is putting the
inheritance beyond her reach.

Even if it is not held to be deprivation, between the date her
entitlement vested and she gave it away, she may have lost any right to
means tested benefits and will need to notify the appropriate authority
AND submit a fresh application to restore any entitlement to further
mean tested benefits.

Paul Saunders