Solicitor Louise Low, in our Dispute Resolution team, explains when and why the Department for Work and Pensions (DWP) can make a claim against an Estate.
One of the principal reasons for delay in the administration of an estate arises when the Department for Work and Pensions (DWP) carries out an investigation.
Such a claim may arise once the Grant has been issued. The DWP will review Grants and, where the deceased was in receipt of means-tested benefits, may investigate, if the value of the estate suggests that there may have been an overpayment of benefits. As the Executors can be personally liable for paying such a claim, they will want to ensure that they retain enough money in the estate to cover any potential liability.
For most debts, the Executors can obtain some protection by advertising for creditors using the statutory notice procedure. This gives creditors two months to notify theme that they are owed money. If the Executors are not contacted in that period, then they can distribute the estate safely provided they had no prior knowledge of any other debts.
However, this notice does not cover claims by the DWP, so Executors will be keen to ensure there is no possibility of such a claim before distributing. An investigation by the DWP can prove quite onerous and take some time to resolve. The DWP can ask for detailed information going back a number of years.
It is important to be aware, however, that the DWP does not have the power to recover all overpayments of benefit. The DWP does have specific statutory powers to recover overpayments in certain situations, most commonly where the deceased was not entitled to all the means-tested benefit they claimed during their lifetime or had failed to report a change in circumstances which affected their entitlement. However, it is important to ensure that the DWP does have a statutory power in each particular case, as in 2010, the Supreme Court held that the DWP could not rely on the common law, outside of the statutory regime, to recover money paid by official error.
Once the DWP have completed their investigation, they will notify the Executors as to whether or not there has been an overpayment. They will set out details of the reasons and the amount repayable. There is an appeals process (mandatory reconsideration). If they are satisfied that there is no benefit to be repaid, then the estate can be distributed.
The DWP can only recover the debt from the deceased’s estate. If the estate is insolvent, the debt will be written, off as it cannot be recovered from relatives. If the estate did have the money, but this has been distributed to the heirs, the DWP can still pursue its claim and the Executors will be personally liable. They may be able to recover money previously distributed, but this is not always possible.
If you are involved in an estate that is subject to such a claim, then it will often be appropriate to obtain professional advice.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
