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Can I save my means tested benefits after I inherit?

Can I save my means tested benefits after I inherit?

Can I save my means tested benefits after I inherit?

We often advise parents and other relatives who wish to leave a gift in their Wills for a relative who is in receipt of means tested benefits. Using an appropriate trust in your Will, the relative in question can be provided for without jeopardising their right to receive means tested benefits and indeed state funded care/support.

The issue is more complex if the same individual receives an inheritance, but steps have not been taken to place that gift in a trust beforehand. The Court of Protection recently made a decision in F and R [2022] which serves as a reminder to ensure appropriate steps are taken before one’s death to ensure those means tested benefits are not affected.

R is in his 30s and has a significant disability from which he will not recover. He is in receipt of benefits and stated funded care and support, which are both means tested. R was left one third of his cousin’s estate with the value of the gift being between £400,000 and £600,000. An application was made to the Court of Protection by R’s father requesting that the funds be placed into trust to prevent R losing his means tested benefits and care. R’s father argued that by granting the application, the Court would be giving effect to the testator’s intention. The Official Solicitor did not agree with this submission.

The Court of Protection considered the Will file and there was nothing to suggest the testator wanted to leave the money to R on trust. In fact, the Court noted that there was a discussion about leaving the gift on trust, but he nonetheless gave R the inheritance by absolute entitlement. Further, the Official Solicitor raised a concern that the authorities would take the view that preserving benefits was the operative purpose of creating the trust. This would then allow the authorities to refuse any means tested benefits or care funding as R would be treated as still owing the money held on trust.

The judge said that “If the perceived intention is to protect R’s means tested benefits, then giving effect to that preservation is a significant operative purpose of approving the application… The Court cannot endorse a proposal whose purpose is to preserve an eligibility for benefits which Parliament has decided does not exist…” The judge went on to note that “it would have been different if [the testator] himself had made testamentary provision for the funds which he wanted to give to R to be put into a trust.”

The case of F and R is important to anyone wishing to leave a gift in their Will to a person or persons who are in receipt of means tested benefits and care. It is a particularly useful reminder to parents with disabled children to inform friends and relatives of the steps that should be taken if they wish to leave a gift to their disabled child or children. There are steps that can be taken to ensure such individuals benefit from that gift, but without compromising their entitlement to support from the state.

Contact our Wills, Trusts & Probate specialists

If you would like to discuss the points raised in this Article or have any questions, please contact IBB’s Wills, Trusts, and Probate team on 01895 207 910 or email wills@ibblaw.co.uk