Deprivation of assets, DLA and Housing Benefit

Trusts Discussion
1

I have a case where husband (H) died leaving a wife (W) and two daughters (D1 & D2).

When H had his Will drawn up D2 was living at home. D2 now lives in council accommodation and receives housing benefit and DLA. H has now died.

In his Will H left his estate - 30% to D1, 70% to D2 and nothing to W who is in her 80s. The home was in F’s sole name.

According to all W believed everything was being left to her and should she predecease then in the split above. They are all shocked about the Will.

In light of the above, both D1 and D2 wish to do a Deed of Variation solely for the purpose of providing their mother with the security of her home. The estate will fall under the IHT threshold so there are no issues with HMRC however they are all concerned whether D2 will deemed to have deliberately deprived herself of assets in respect of the benefits she is currently receiving.

One point to mention is that D1 is currently a home owner and does not want to take and have to sell the property.

W is updating her Will to reflect a 50/50 split between D1 and D2 so D2 will eventually have assets at her disposal.

Any thoughts regarding the position of Deprivation of Assets would be greatly received.

Thanks

Karen Starkey
KWW Solicitors

2

Yes, I believe that D2 executing a deed of variation on favour of W would be considered “deprivation”.

If W issued a claim under the Inheritance (Provision for Family and Dependents) Act 1975, and the variation is entered into to compromise or otherwise settle the claim, this should largely take the sting out of the “deprivation” argument. Having said that, there may still be an argument for deprivation if the settlement was alleged to be too generous to W.

The fact that D2 gets 70% under H’s will, but will only get 50% under W’s will, could be seen as supporting an allegation of deprivation.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals