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Deed or Variation needed or not?

Last post Wed, Oct 05 2011, 5:52 PM by InterZone. 4 replies.
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  •  Wed, Oct 05 2011, 5:52 PM

    Re: Deed or Variation needed or not?

    Thank you for that. I saw the article previously. I have just had the below from another lawyer. Comments most welcome:

    You could draw up a Deed of Variation varying your mother's Will so that your share was left on discretionary trust by her.

    Alternatively, you could draw up a Deed of Variation varying your mother's Will so that you are deleted as a beneficiary and your share is left on discretionary trust to benefit your disabled child.

    The rules as to deliberate depravation of capital are unclear. However, you have a greater chance of success if the trust is set up by a Deed of Variation rather than set up by you personally.

    Also, I would consider that the arguments for setting up a discretionary trust for your disabled child is a stronger argument since you can state that one of the purposes of the trust is to manage money because your child will never have sufficient mental capacity to manage their own finances.

    It appears that the only reason for setting up the discretionary trust for your own benefit would be to be able to still claim means tested benefits.

    If the DWP did decide that this was a deliberate deprivation of capital, you can always appeal the decision to an independent benefits tribunal.

    To answer your other questions:

    1. If you receive your inheritance and then set up a discretionary trust fund, I consider that this would be seen as a deliberate deprivation of capital.

    2. The best option would be to vary your mother's Will so that your inheritance passes direct to your disabled child with the Deed of Variation setting up the terms of the discretionary trust. I cannot guarantee that this would not be treated as a deliberate deprivation of capital but there are stronger arguments for saying that it is not.

    The only person who needs to agree to the Deed of Variation is you. The other beneficiaries do not need to agree since it doesn't affect their share of the estate.

    Decisions about deprivation of capital are down to the discretion of an individual decision maker.

    Thanks.

    • Post Points: 5
  •  Wed, Oct 05 2011, 1:02 PM

    Re: Deed or Variation needed or not?

    May i draw your attention to this article from a Solicitor who specialises in the subject and in conjunction with your previous post. To a large degree it depends on how much money you are talking... opposed to the costs or as to whether all the legal work was considered succesful. If the amount was say for example only 50k, then you could quite easily justify the correct usage of that amount of money with reference to what would be classed as a perfectly acceptable form of expenditure.

    http://www.ecadviser.com/xq/asp/sid.0/articleid.8012CD17-AFFB-491C-9ECE-FCA40E62D994/eTitle.Inheritance_Avoiding_benefit_reductions/qx/display.htm

    Although it is felt that the benefits agency may possibly regard your proposal as a deliberate 'deprivation of capital,' it does suggest other acceptable expenditure and alternative methods for the disposal of funds that would satisfy the benefits agency, such as the purchase of essential facilities or a larger or more suitable home for you and your families needs.

    • Post Points: 20
  •  Wed, Oct 05 2011, 10:13 AM

    Re: Deed or Variation needed or not?

    Hi Odeliza

    To answer yr questions:

    My child is not a stated beneficiary. I wanted to add him as a beneficiary and to use those funds to open a discretionary trust for vulnerable persons.

    Consensus on other forums seems to be that since I am the beneficiary, any action I take (DOV; opening a trust fund) is seen as deprivation by the benefits office. Any time I do not claim any money I am able to claim it is deprivation.

    In person injury trusts deprivation is not an issue, but it doesn't seem to apply in vulnerable persons trusts.

    The local CAB do not possess the expertise to answer these questions.

    Regards

    • Post Points: 20
  •  Wed, Oct 05 2011, 7:25 AM

    Re: Deed or Variation needed or not?

    I am slightly confused by the way you have worded your post. Are you saying that one of the 5 beneficiaries is your disabled child and you are looking to establish a DOV and Trust so the money does not go directly to him / her; or are you saying that you are the beneficiary and you are looking to divert the money to a Trust Fund for your child rather than receive it yourself?

    If you are the beneficiary, and are in receipt of benefits, then it is quite possible that the Benefits Office will regard diverting the money to a Trust as deliberate deprivation of capital, but I would check this for certain with someone like Citizens Advice Bureau.

    If you are not in receipt of benefits yourself then I am not sure why you feel you need to go to the expense of a DOV and Trust now. It would be perfectly possible, and indeed best advice, to write your will (and that of any spouse or partner) so that any legacy to your disabled child is paid into a Disabled Persons Trust with your child as the beneficiary. Under what is known as CRAG guidelines the capital within such a Trust is not taken into account for benefit purposes, although there are rules regarding what the Trust can and cannot pay for, e.g. it can pay for holidays but not for day-to-day living expenses that any benefits being paid are designed to cover.

    • Post Points: 20
  •  Thu, Sep 22 2011, 4:58 PM

    Deed or Variation needed or not?

    Hello

    Opinions would be most appreciated here.

    As one of 5 beneficiaries of my late mother's estate, can I set up a discretionary trust fund for vulnerable persons for my child (who has autism), without this action being seen as a deliberate deprivation of capital by the benefits office.

    I am aware of the savings/capital limits set but don’t know what the legal position is regarding how one is deemed as deliberately depriving oneself of capital in order to continue receiving benefits.

    OR must I get a Deed of Variation to add my son as a beneficiary (upon agreement by other beneficiaries of course) ? It can be

    quite a costly exercise relative to the values involved (I have been quoted between £2.5 to 4k +VAT for the DoV and Trust Deed).

    Thanks

    • Post Points: 20