Legacies and Entitlement to Means-Tested Benefits – High Court Ruling

When making a will, most people would wish to provide for loved ones in need. As a High Court case showed, however, means testing of many state benefits creates a very real risk of such good intentions coming to nought and that is one very good reason why professional will drafting is so important.

The case concerned a woman aged 21 with autism and learning disabilities, who was left about £170,000 in her grandfather’s will, subject to her attaining the age of 25. On her receipt of that capital sum, she would lose her entitlement to means-tested benefits on which much of her income and her placement at a specialist residential college depended.

With a view to avoiding that outcome, her mother – who was entitled to act on her behalf under a lasting power of attorney – applied to the Court to have the money placed in a disabled persons’ trust (DPT). The woman lacked capacity to make important financial decisions for herself, so the application was made under the Mental Capacity Act 2005.

The Court had no jurisdiction to rule on whether placing the woman’s inheritance in a DPT would be an effective means of maintaining her entitlement to means-tested benefits. In upholding her mother’s application, however, it noted that, if she lost such entitlement, her grandfather’s clear intention would be frustrated.

Authorising the creation of a DPT would better put into effect the grandfather’s wish to financially benefit his granddaughter. There could no public policy objection to the creation of a DPT for the purpose of promoting the woman’s welfare and education even if it had the subsidiary effect of maintaining her benefit entitlements.