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When are Monies Inherited?

including wills and probate
JonE
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When are Monies Inherited?

#440722

Postby JonE » September 8th, 2021, 6:21 pm

For the purposes of Council Tax Support and Housing Benefit (single pensioner renting sheltered housing), when does a beneficiary first ‘have’ the capital from an estate that would have an effect on their entitlements?

It strikes me as reasonable for the effective date for these purposes to be when the beneficiary first has control over sufficient funds to bring their total personal capital over the ‘disregard’ - but I haven’t yet found reliable confirmation that this is also the 'official' view. Any clues or pointers to help nail it down?

If such is the case then presumably an initial distribution of a few grand such that personal capital remained below 10k wouldn’t trigger a recalculation and any subsequent top-up to replenish the initial burn would have no effect if personal assets remained below the threshold - until the executor chooses to distribute a sufficiently hefty chunk and a change of circumstances needs to be notified. At that point the beneficiary will definitely have the means to pay full whack rather than just limited cash coupled with great expectations.

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Re: When are Monies Inherited?

#440743

Postby Lootman » September 8th, 2021, 7:00 pm

JonE wrote:For the purposes of Council Tax Support and Housing Benefit (single pensioner renting sheltered housing), when does a beneficiary first ‘have’ the capital from an estate that would have an effect on their entitlements?

It strikes me as reasonable for the effective date for these purposes to be when the beneficiary first has control over sufficient funds to bring their total personal capital over the ‘disregard’ - but I haven’t yet found reliable confirmation that this is also the 'official' view. Any clues or pointers to help nail it down?

If such is the case then presumably an initial distribution of a few grand such that personal capital remained below 10k wouldn’t trigger a recalculation and any subsequent top-up to replenish the initial burn would have no effect if personal assets remained below the threshold - until the executor chooses to distribute a sufficiently hefty chunk and a change of circumstances needs to be notified. At that point the beneficiary will definitely have the means to pay full whack rather than just limited cash coupled with great expectations.

Given that welfare benefits are based on immediate needs, then the fact that an individual is due an inheritance at some future point should not affect their current entitlement to those benefits.

This leaves open the possibility that a beneficiary and an executor could "conspire" together to drip feed that inheritance such that the beneficiary never loses his right to benefits.

I would imagine that there are provisions for that kind of eventuality, perhaps involving time limits on how long the executor can hang onto the money. And possibly involving the subsequent repayment of those benefits once the bequest is paid in full.

It is a little like the situation where someone going through bankruptcy gets an inheritance before the bankruptcy is discharged. In that case I believe that the assets cannot be disregarded simply because they have not been paid out yet.

The best way to pull this off, it seems to be, is if there is a trust structure. In that case the trustees can absolutely withhold any payments if it would thereby prejudice the situation of the recipient. If you envisage this situation then your Will could be amended to hold any individual bequest in trust, allowing the trustees to use their discretion over the timing of the disbursement.

JonE
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Re: When are Monies Inherited?

#440798

Postby JonE » September 8th, 2021, 10:12 pm

Lootman wrote:This leaves open the possibility that a beneficiary and an executor could "conspire" together to drip feed that inheritance such that the beneficiary never loses his right to benefits.

There's no intent to create an artificial claim for the benefits, the executor certainly doesn't wish to prolong the administration and no cunning stunts are to be pulled off. The amount of benefit received is not what you would regard as a significant sum - but it is currently significant for a claimant with small income and no capital (for the time being).

The question is when must the beneficiary notify the change of circumstances. To have the benefits withdrawn before the beneficiary has access to any funds feels wrong. To have the benefits withdrawn when the beneficiary suddenly has access to only a limited lump sum also feels wrong when that sum would be insufficient to limit benefits if it was already held. It is clearly right for the benefits to cease altogether once the beneficiary is given control of funds which exceed the 16k top-limit.

What 'feels' right or wrong isn't always what the rules and regs stipulate so I was hoping to get relevant links. Perhaps the date of the Grant of Probate is used for the calculations regardless of when the beneficiary becomes aware of an inheritance that might exceed the capital limit or receives any (or sufficient) of it. I just don't know but wish to discover the facts.

The bankruptcy situation you mention may have similarities but you refer to the undischarged bankrupt 'getting' an inheritance - so what constitutes 'getting' for the purposes of the relevant legislation? Date of decease, date the will is proved, date of any distribution - or something else? Somewhat rhetorical as of more interest to me is what the rules are regarding Council Tax Support and Housing Benefit in England (I've seen no signs that they might differ between Councils - but, there again...).

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Re: When are Monies Inherited?

#440811

Postby Lootman » September 8th, 2021, 10:53 pm

JonE wrote:The question is when must the beneficiary notify the change of circumstances. To have the benefits withdrawn before the beneficiary has access to any funds feels wrong. To have the benefits withdrawn when the beneficiary suddenly has access to only a limited lump sum also feels wrong when that sum would be insufficient to limit benefits if it was already held. It is clearly right for the benefits to cease altogether once the beneficiary is given control of funds which exceed the 16k top-limit.

I see zero reason for disclosure of a possible future windfall until such time as it is 100% certain as to amount and date. Which requires a grant of probate and a HMRC signoff that all taxes have been paid. And other debts have been fulfilled.
.
So in that position, either as the beneficiary or executor, I would feel zero obligation to disclose the bequest and, indeed, would worry about personal liability if I did.

When in doubt, say and do nothing,

JonE
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Re: When are Monies Inherited?

#440952

Postby JonE » September 9th, 2021, 12:50 pm

Lootman wrote:I see zero reason for disclosure of a possible future windfall until such time as it is 100% certain as to amount and date. Which requires a grant of probate and a HMRC signoff that all taxes have been paid. And other debts have been fulfilled.
.
So in that position, either as the beneficiary or executor, I would feel zero obligation to disclose the bequest and, indeed, would worry about personal liability if I did.

When in doubt, say and do nothing,
So not the same as your belief if anticipated inheritance involves a bankrupt beneficiary. Your personal inclinations are not an approach with which the claimant/beneficiary is comfortable given that a change in circumstances must be notified and (for Council Tax Reduction at least) failure to do so carries the threat of penalties and prosecution. Whether such powers would be exercised in practice is not the point as far as claimant is concerned.

This aspect is obviously no business of the executor but IHT liability was resolved as pre-requisite for probate, of course, and knowledge of general (limit-busting) order of magnitude of cash is now sufficiently certain (but subject to ongoing property costs until that asset sold by executor) so 'amount' isn't an issue but 'date' is the very crux of my question. In the absence of hard facts I'll suggest that a phone call to relevant council when threshold-crossing funds are actually received and within claimant's control should be enough for a reasonable person to recognise that the claimant is showing willing. It's then down to the council to justify any attempt by them to back-date the withdrawal of benefit to some earlier point.

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Re: When are Monies Inherited?

#440954

Postby Lootman » September 9th, 2021, 12:56 pm

JonE wrote:
Lootman wrote:I see zero reason for disclosure of a possible future windfall until such time as it is 100% certain as to amount and date. Which requires a grant of probate and a HMRC signoff that all taxes have been paid. And other debts have been fulfilled.
.
So in that position, either as the beneficiary or executor, I would feel zero obligation to disclose the bequest and, indeed, would worry about personal liability if I did.

When in doubt, say and do nothing,

In the absence of hard facts I'll suggest that a phone call to relevant council when threshold-crossing funds are actually received and within claimant's control should be enough for a reasonable person to recognise that the claimant is showing willing. It's then down to the council to justify any attempt by them to back-date the withdrawal of benefit to some earlier point.

Yes, I would say and do nothing until the funds are actually received. Until then nothing is certain.

If the council then wants to start asking questions about when the inheritance was first known about at some earlier date then they can try that. My guess is that they won't bother that much.

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Re: When are Monies Inherited?

#440956

Postby scrumpyjack » September 9th, 2021, 1:27 pm

Yes and if they did a deed of variation to renounce the inheritance in favour of others, legally that would mean that they had not inherited the money and they would not receive anything from the executor. But I'm sure it would break the rules about intentionally getting rid of assets.

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Re: When are Monies Inherited?

#440962

Postby Lootman » September 9th, 2021, 1:51 pm

scrumpyjack wrote:Yes and if they did a deed of variation to renounce the inheritance in favour of others, legally that would mean that they had not inherited the money and they would not receive anything from the executor. But I'm sure it would break the rules about intentionally getting rid of assets.

I suspect so also. The correct way to handle this would be in the Will. So if one of my beneficiaries is in receipt of means-tested benefits (or if they are going through bankruptcy as I mentioned earlier) then it could be prudent to change my Will so that the bequest to that person is held in trust. As I understand it that trustee could then quite legally hold onto those funds for as long as needed to avoid disadvantaging the recipient.


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