Benefits fraud and the subject of benefits affected by an inheritance can raise some questions by clients. As a Will Writer it is common practice to use trusts to protect the inheritance of a beneficiary who currently obtains benefits. (Ed. For more information on special trusts to avoid benefits fraud, click the link. Few Wills are regularly reviewed and updated to keep up to date with changing circumstances. For one such service which may help to prevent accusations of benefits fraud click the link.)
Do NOT give the gift of Benefits Fraud in your Will!
The use of a discretionary trust prevents the inheritance being classed as an asset of the beneficiary for the purpose of any ’means tested’ benefit. This is not fraudulent activity just sensible estate planning. When it comes to dealing with probate however the unsuspecting professional advisor could find themselves in a position where they are being asked to assist a beneficiary commit benefits fraud and prevent their benefits being affected.
A person in receipt of means tested benefits must declare any inheritance so that their entitlement can be reassessed. It is not uncommon for someone to attempt to ‘hide’ their inheritance by requesting that it is paid into the bank account of a different family member or friend and caution must be exercised in respect of any such requests. Proper planning means that such deception is entirely unnecessary – but sadly few people take proper advice which would avoid accusations of benefits fraud.
The serious approach taken by the courts in relation to benefits fraud has been highlighted this week after a 57 year old benefits cheat was jailed for nine months and is now subject to a proceeds of crime investigation into his affairs after he fraudulently claimed £64,000 despite his wife receiving a £105,000 inheritance. (Ed. It bears repeating that charges of benefit fraud could easily have been avoided had the person who his inherited from had good advice which took into account their circumstances.)
Michael Mead had appeared in court after being charged with benefits fraud for falsely claiming income support for eight years by saying that he and his wife were unemployed.
When he appeared in court to face charges he failed to mention the inheritance which had already been paid to his wife at that time. Sentencing was delayed when he promised to repay the falsely claimed benefits however when appearing for sentencing this week he had repaid just £261. In addition, he had continued to claim housing benefit and council tax benefit while awaiting sentencing and claimed the inheritance had been used to buy inheritance bonds and he had no access to capital to make repayments.
Also a bereaved wife has been charged with fraudulently claiming £8000 widow’s allowance despite her new partner moving into their home.
The previously named ‘mum of the year’ had failed to declare her change in
circumstances which meant that she was no longer entitled to the benefit.
The Coventry Telegraph reported that Ian Reynolds failed to declare an inheritance of £25,000 and carried on claiming Housing Benefit, Job Seekers Allowance and Council Tax Benefit for five years.
During a hearing at Rugby Magistrates Court Mr Reynolds pleaded guilty to three counts of benefit fraud and was given 200 hours of community service. The defendant was also ordered to pay £200 in court costs and was given a 12 month supervision order.
With cases on the rise, it is important that you do not inadvertently get involved in assisting with fraudulent activity. Be aware of the possibility of fraud occurring and be on the lookout for any signs of deception.