When dealing with an estate an executor may receive a letter from the Department for Work and Pensions (DWP) asking for details of the deceased’s assets and liabilities.
The letter will say that you should treat their enquiries as a potential claim against the estate and they will recommend that you do not distribute the estate.
It is very common to receive these letters but they can be a little bit alarming.
Why is the DWP making these enquiries?
The executor will have received this letter because the deceased was receiving a means tested benefit such as pension credit. A means tested benefit is a type of benefit that you would only be entitled to receive if you meet certain financial criteria regarding your income and savings.
The DWP can investigate whether the deceased was entitled to receive the benefits they were receiving. If they were not receiving the correct amount of benefits, or if they were not eligible to claim anything at all, the DWP can try to recover any sums paid in error from the estate.
When a grant of probate is applied for it becomes a public document and anyone, including the DWP, can access a copy of it. The grant states the value of a person’s estate as submitted to HM Revenue & Customs by the executor as at the deceased’s date of death. The DWP will review grants that have been issued and if they note that someone has passed away who was in receipt of certain types of benefit they may contact the executor to investigate further.
If you are an executor and you have received a letter, what should you do next?
You will need to send the DWP a list of the assets and liabilities as at the date of death. You should make sure that this list is as accurate as possible.
The DWP will then either write to you to tell you that they do not intend to investigate further or they will write to you to request further information.
They will usually ask for bank statements and further details regarding particular assets dating back a number of years. You will need to request these statements from the bank and send them to the DWP. The DWP will assess the statements and they may also ask you for more detailed information about particular payments that they notice on the statements.
If the DWP determine that the deceased was not entitled to receive the benefit that they were receiving the estate may need to make a repayment to the DWP. It is possible that the claim could amount to thousands of pounds.
These investigations can take many months to conclude and you may find that the beneficiaries become very impatient. You will have to explain that you are unable to distribute the estate until the DWP’s enquiries have concluded. If you knowingly distribute the estate and then find that you do not have enough money to repay the DWP, you could be held personally liable to repay the DWP if you cannot recover the money you have paid out to the beneficiaries.
What if you have already distributed the estate?
If you have already paid the beneficiaries their entitlements from the estate and you receive a letter from the DWP about a potential claim you should contact the beneficiaries to explain that there could be money due to the DWP which will need to be repaid.
You should ask the beneficiaries to return the money they have received to you to hold pending the outcome of the DWP’s enquiries.
You must ensure that you act quickly. As executor you could ultimately be personally liable for the sum due.
If you are in any doubt you should seek specialist legal advice.