Today’s article focuses on the importance of legal advice on wills, with the person in question deemed incapable of managing his own property and financial affairs. An application was later made to the Court of Protection by his father with the intention of gaining authority in order to settle his son’s inheritance upon trusts.
Keep reading to find out the background of this case and what the court ended up deciding.
This case was concerned with a man (R) in his 30s who suffered from long-term severe disabilities which impacted on his capacity to manage his property and affairs. R had been left with a substantial interest in the will of a distant relative, who was aware of R’s disabilities. The relative’s will left R one third of his residuary estate, which was a sum worth between £400,00 and £600,000. However, R was also in receipt of a number of means-tested benefits which would be affected by the inheritance.
This came to around £60,000 p/a of state benefits, with £52,000 of his benefits mean-tested, a term which means that the amount in benefits received depends on that person’s income and savings or capitals in other words. As R does not have other income (apart from the benefits he is receiving), the amount of his savings or capitals to be received will affect the amount of his state benefits. As a result, R’s benefits would be substantially affected by the receipt of the inheritance from R’s distant relative. R’s father subsequently applied to the Court of Protection in order to gain authority to settle R’s inheritance upon trusts in order for the capital to be disregarded so as not to affect R’s entitlement to means-tested benefits.
This application, was however, opposed on behalf of R’s Official Solicitor acting as his litigation friend. This was for two main reasons:
- The planned scheme was unlikely to work
- Placing R’s inheritance upon trust was likely to amount to an intentional deprivation of his capitals
As a result, R would be assessed as being entitled to his trust under the relevant benefits legislation. Furthermore, the Official Solicitor also argued that R’s father’s plan to place the inheritance upon trust would impose additional costs. It was also argued that compared with management through a deputyship under the Mental Capacity Act 2005, it would have other disadvantages.
The court rejected the argument made by the applicant and declined to authorise the creation of the trust. They also accepted the argument made by the Official Solicitor and found that the intention of the applicant to secure the means-tested benefits and the motivation of R’s dead relative, the testator, were two sides of the same coin.
Furthermore, the judge noted a key motivation which undermined the creation of the application in the first place. The applicant’s own statements used words of causation to link the application with the effect of preserving the means-tested benefits. As a result, the judge found that the benefits authorities would conclude that the operative purpose behind the creation of the trust was the preservation of R’s benefits.
The court did however point out that the situation would have been different if the testator had made testamentary provisions for the funds that he wished to give to R to be put into a trust.
This case clearly outlines the impact which inheritance can have on those receiving means-tested benefits. It also emphasises how important it is for testators to take proper legal advice when making a will, particularly if the recipients lack capacity or receive means-tested benefits. Those preparing wills should ensure that they discuss with their client whether any of the beneficiaries receive means-tested benefits. If they are, then an appropriate trust structure should be put in place within the will itself to preserve the benefits. Leaving it until after the beneficiary has received their inheritance is unlikely to work, as in this case.
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