Hello there. My brother has MS, has his life organised around state benefits. We went through PIP assessment together (which I know is not means tested) and appeal - and won higher rate. He is about to inherit some from our Mum, not enough to buy Necker Island, but enough for him to lose his means tested, which we understand, so we’re not looking to dodge the system, but I’d like to help him maximise what he has so he can live comfortably and enjoy some treats and trips away etc, and leave whatever he can to his kids. I was wondering if anyone knew of any IFAs who specialise/have sympathy with MS claimants, who might be able to give him some (paid for) advice?
When you say “about to inherit”, has your Mum died already? (Sorry).
I’m not an IFA but my Mum died earlier this year and there wasn’t an opportunity to change her will. My sister & I resolved the situation by means of a Deed of Variation to divert some inheritance from our Mum to our respective kids because my sister & I were trying to reduce IHT exposure.
It would work in your brother’s case too, although I believe the means-testing of benefits kicks in at just £16k, which may leave him with an insufficient buffer - just depends what he wants to do with it. An IFA or solicitor is likely to charge £1000 for a DoV but I produced one from a template we found online.
The DoV works by diverting money bequeathed to an individual onwards to secondary beneficiaries. It is effectively a directive from your brother to your Mum’s executors to send the money (you decide the amount) intended for your brother to others named by him. So the money never touches his account, his benefits are unaffected, and rather than being a gift from him to his kids, bypasses him completely from an inheritance and taxation point of view. A DoV can be activated post mortem and prior to dispersal of the estate by the executors (and possibly after dispersal, I’m not sure). The DoV does not modify your Mum’s will but obviously, your brother can’t redirect more than he was originally due to receive! You can do two types of DoV: one for money and another for property.
We hadn’t realised about the property option until my Dad began to rewrite his will, so we’re doing that one at the moment, with help from a solicitor. Effectively my Mum’s half of their house is now diverted into a trust managed by my sister and I, thus removing that value from my Dad’s estate. Whilst spousal inheritance does not incur IHT, my Dad’s net worth would certainly be of interest to the HMRC now…
Let me know if you want to know more.
Thanks for your response Graeme, I really appreciate your time. Yes, mum passed away recently and we are just looking at her affairs, probate etc. I had already checked into the idea of diverting, and understand it’s different with regards to means-tested benefits than inheritance tax. The local authority would deem it as him deliberately depriving himself of assets. To be honest, it’s less the benefits that concern me and more about getting him some solid investment advice from someone who understands the particular needs of someone in his situation. I’d like him to have maximum security but with some flexibility, so he can enjoy some of the things in life he hasn’t been able to afford recently.