Inheritance Question

[Zenduri]

I know this isnt the place to ask and it will no doubt draw some fire from some people, plus im being overly vague but whatever...

Person "A" will come into an portion of a larger inheritance with their share worth roughly £25k at some point in the very near future from a relative. When they receive the inheritance this will effect their pension and entitlements in a negative manner which would then mean they burn through the money with no benefit to them. Person "A" has openly stated they dont want the money due to this and would prefer to pass this on to Person "B", their child for them to benefit from the money.

My understanding of the situation would there is no way Person "A" can take receipt of the money and pass to Person "B" without this being seen as hiding the money when it comes to Person "A"s pension and entitlements so therefore the only option to avoid legality issues and to give the money to Person "B" is for the will to be changed prior to the inheritance being fulfilled?

For context the person the inheritance is coming from is still currently alive but rapidly declining with no positive outlook.

 

[Zenduri]

Your understanding is correct. Person A can also refuse the inheritance, but they cannot decide who receives their share.

In essence you're correct though. The will should be amended before the person dies. Otherwise all person 'A' can do to avoid the problem is reject the inheritance and then the 25K would be distributed to the other beneficiaries.

Thats what i thought, however doing some research ijust came across a "deed of variation" which seems that Person A can essentially reject the inheritance within 2 years of the death and agree that all of their share goes to a third party so person "B" in this instance. Not sure if im interpreting this correctly

 

[Zenduri]

can they not just accept a certain amount that doesn't put them over the limit

if you had 16k it seems the first 6k is ignored so essentially you could have 16+6=22k ?
I guess your benefits would be almost 0 though until some gets spent or given away

They would rather the money skips them completely and that its put to a positive use. The person receiving the inheritance is already well over the retirement age so as stated in posts above it would effect their entitlement and drain a decent chunk of the inheritance so they have gone with the idea of just bypassing them altogether as they dont need it and would rather pass it on down the family for it to be used in a more productive and beneficial way.

 

[Zenduri]

For the rules around a Deed of Variation, refer to the .gov website here: https://www.gov.uk/alter-a-will-after-a-death

From a quick look, they're mostly concerned about whether it would impact the IHT rules, not means testing ... so you may well actually be able to do what you want with this. Make sure the executors of the will are aware of the change as soon as possible - but don't expect anything to be quick. Handling a will takes forever (my mum's took nearly a year and it was a simple 50/50 split between me any my brother) and COVID has made it all worse.

The easier option would probably still to get the will changed if at all possible - then there's no doubt or faff involved.

If you change anything, all the beneficiaries must agree,

My reading of that is only the person who is forgoing their inheritance and passing it to another person has to agree. I dont think there would be any issues with all beneficiaries agreeing anyway. As said above it would make sense to change it now before the death though.

 

[Zenduri]

How is it disrespectful exactly? If the testator wanted the money to go directly to the DWP (which is basically what the outcome of this would otherwise be), do you not think they would have put that in their will instead?

This. Basically the Testator has assets which have been sold and wants to pass the money on, Person A is longtime retired, 60 years hard work, the money will impact their entitlement and basically end up being given to the government anyway so rather than that they want to pass the money to person B to help with a house deposit basically.