Update 4 July 2018: STEP has liaised with the DWP on this technical issue. Please see its response below.
If you work in the probate field you will be very familiar with the process of submitting a statutory advertisement, (under the Trustee Act 1925 for England, or the Trustee Act 1958 in Northern Ireland) in The Gazette and a local newspaper, following the receipt of the grant of representation.
A statutory notice is a published advertisement giving notice of the personal representatives’ intention to distribute the deceased’s estate. The objective is to ensure that sufficient effort has been made to locate creditors, prior to distributing the estate to the beneficiaries, whilst safeguarding the executor or trustee from becoming personally liable from any unidentified creditors. If a notice is not submitted and a creditor subsequently makes a claim after the estate has been distributed, then the executor or trustee may become personally liable for any unidentified debts.
The notice gives creditors and anyone else who may have an ‘interest’ in the estate up to two months to make a claim via the personal representatives, although they do not affect the right of certain people to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
Once the notices have expired the personal representatives may then distribute the estate, knowing that they will not be personally liable should claims or debts of the deceased become payable. Therefore, it is prudent and good practice that no significant distributions should be made from the estate before the statutory notices have expired.
An exception for the DWP
However, not all advisors are aware that if you have already paid the beneficiaries their entitlements from the estate, and you subsequently receive a letter from the UK Department for Work & Pensions (DWP) about a claim, then you are not protected by the statutory notice.
In these circumstances you will need to contact the beneficiaries to explain that some money may need to be reimbursed to the DWP, and that they should return the money they have been given, pending the outcome of the enquiry. Clearly this scenario causes dissatisfaction for the beneficiaries, as well as delay and potential costs to the advisor.
Terry Moore TEP of Burstalls in Hull initially brought this to STEP’s attention. STEP’s UK Practice Committee has subsequently raised the lack of awareness around this issue and written to the DWP pointing out the difficulties it presents, and the length of time it often takes to receive a repayment request. STEP will report back in due course.
Update: 4 July 2018: The Department for Work and Pensions (DWP) has responded to STEP’s enquiry in relation to DWP claims and whether they are bound by statutory notices:
The DWP has confirmed that it does not have any authority to dismiss the protection afforded to executors and trustees by the Trustee Act 1925, section 27. If the DWP registers an interest in an estate outside of the expiry date stipulated in the statutory notice then the interest will be withdrawn, providing the executors or trustees produce evidence of the statutory notice, and the estate has already been distributed to the beneficiaries. All of these criteria have to apply for this to be the case. If the Estate has not been wholly distributed or not distributed at all despite the notice expiring then the DWP would still expect the Executor or Trustee to treat this as a potential claim on the Estate. This is due to the fact that the Executor/Trustee is now aware of this interest and has not yet distributed the Estate.
However, if the DWP registers an interest within the specified timescale, as a potential creditor of the estate, there is an expectation that executors and trustees accept this interest as a contingent liability and act accordingly until the liability has been established. If a claim has not been quantified on the date the statutory notice expires, and the executors or trustees are being pressurised to distribute the estate to the beneficiaries, then there are some options available to the executors or trustees. These options may include obtaining the beneficiaries’ agreement to indemnify the personal representatives if the liability ever crystallises or to insure against the contingent liability. However, the DWP reinforces that it cannot advise executors or trustees how to administer the estate.
In addition, the DWP has advised that work is ongoing between DWP and HMRC aimed at streamlining the system.
STEP will continue to liaise with the DWP on these technical improvements.
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Can I please ask, is it the beneficiaries who are not protected against the statutory notices or the personal representatives?
Is there any limit on how far back DWP can go to recover overpayments? DWP are seeking to recover (as yet) unspecified amounts of Pension Credit from my mother who passed away March 2018. They are asking for financial records going back to 2008!
My Mother also passed away in March 2018 and DWP have requested ststements going back to 1999!! This has been going on for over 6 months niw with no end in sight. Are they actually allowed to do this??
The DWP are entitled to investigate further and will usually ask for bank statements and details of particular assets dating back a number of years. It can be onerous and slow, but we have been informed that they are trying to improve and streamline the process.