‘My brother has left me a house, but I don’t want it’

Ask A Lawyer: our reader would rather the property went to her children

Ask A Lawyer

Dear Gary,

My situation is causing me much anguish. I am an 81-year-old disabled woman living on my own in a leasehold apartment which I own.

Since 1995 – after suffering a severe stroke which prevented me from working, my husband’s bankruptcy and our subsequent divorce – I have been in receipt of means-tested benefits and severe disability allowance.  

My parents owned a modest home, which on their death, was to be left to my brother. I was content with this as I had my own home.

It was always understood by me that on his death, my brother would leave his house to my two children. But after he recently died, it turns out he has left it to me. He also made other gifts to some charities.

I told my children that I would be giving them the house anyway, which they were delighted about as they are both struggling financially.

I was going to do this as soon as possible, but was then told by a friend that it was not advisable, due to my benefits. 

The thought of losing my benefits fills me with dread as my care costs alone will be over £500 a week – and what would happen to me when the legacy runs out? 

– Jean, by email

Dear Jean,

Part of my work is about helping people claim an inheritance denied to them for some reason. Another part is assisting people who decide to turn down an inheritance. 

A person like you who inherits a gift they do not want, either under a will or via an intestacy, has a legal right to not accept the gift.

The choice is to “disclaim” or “vary”, but we do need to think through all the implications of that for your circumstances.

If a gift is disclaimed, the person giving it up cannot direct what happens to it instead. Also, the whole of the gift must be given up and not just part of it, so in your case, you could not retain a part share of the house and give the rest to your children.

If you disclaimed, the outcome as to who receives the house instead is dictated by the will. Your brother may have named your children as the default beneficiaries for the house (which would accord with your wishes) or he may have named the charities (which I assume would not). 

So, check the will. Or, if you want to be certain about your children taking the house instead of you, a variation is the way to go. A variation of a gift under a will or intestacy is usually established by deed, but it can just be done by a letter. 

However, whichever way it is created, certain conditions must be adhered to.

It must be signed by the party who is giving up the gift within two years of the death of the person from whom the gift is passing, and if it is intended to have effect for inheritance tax and/or capital gains tax purposes there must be a statement to that effect. 

This is relevant if, for instance, you did not want your brother’s house to be included in your own estate for future inheritance tax purposes. 

Though not relevant to you, a stamp duty exemption certificate may also be required if the variation alters where stocks, shares or certain securities end up. 

If the variation alters the amount of inheritance payable in respect of your brother’s estate, you will have to send details to HMRC. If the inheritance tax immediately payable is not impacted, HMRC no longer needs to be made aware of the variation when it is created. 

At my office, if one of our clients signs a variation, we keep a copy with their will.

In your case, I regret all of this is academic as either disclaiming or varying the gift of your brother’s house will put your means-tested benefits at risk.

If you went ahead, the next time your benefits are assessed, you would have to declare your own “gift” to your children of your brother’s original gift to you, and you would be deemed to have made a deliberate deprivation of assets.

The friend who warned you of this is correct and the highly likely outcome would be the state assessing you as still owning the house, even if you did give it away. 

The fact that your brother has left you the house means, whether you keep it or not, it will be assessed as being yours.

So, you absolutely must retain the gift of the house for yourself and either rent it out or (more likely) sell it so you can pay for your care using the house proceeds.

If you are in receipt of state benefits, you have a legal responsibility to inform the state if your circumstances change – and yours have. 

That said, I would recommend you look at your own accommodation. If it is reasonable in to upgrade any aspect of it, including moving somewhere more spacious (perhaps anticipating you requiring live-in care in the future), now is the time to do so and use some of the capital from your brother’s house for that purpose.

Maybe one or both of your children could move in with you. Remember, your own home is disregarded from a financial assessment for social care while you are living in it.

Once you have improved your own home (within reason), the rest of the proceeds of your brother’s house will be available to pay for your care.

If the money does eventually dwindle down to the point where you once again become entitled to means-tested benefits, the situation you were in before the unexpected (and unwanted) gift from your brother will resume.

All this could have been avoided if your brother had made a will leaving his house to your children.

‘Ask A Lawyer’ should not be taken as formal legal advice, but rather as a starting point for readers to undertake their own further research.