If you are administering the estate of a loved one and receive a letter from the Department for Work and Pensions (DWP), it can come as an unwelcome surprise at an already difficult time.
These enquiries are not unusual but they should be taken seriously. In many cases, the DWP is simply asking for information so it can check whether the deceased was entitled to the benefits they received during their lifetime. However, if an overpayment is identified, the DWP may seek to recover that money from the estate.
This blog explains why these investigations happen, what personal representatives should do when they receive a letter, and how to reduce the risk of problems later in the administration.
Why might the DWP contact a personal representative?
The DWP may contact the personal representative(s) for a number of reasons. This could include:
- the deceased having undeclared savings or capital
- benefits continuing to be paid after death
- discrepancies between the probate value of the estate and the figures previously reported to claim the benefit
- the deceased being in receipt of means rested benefit (such as pension credit)
What is the DWP investigating?
In most cases, the DWP is investigating whether there was any under or overpayment of benefit or pension during the deceased's lifetime. This does not necessarily mean there has been wrongdoing and it may simply mean that the DWP wants to review the deceased's circumstances more closely before closing their record.
For instance, it may be that the DWP want to review whether the deceased was in receipt of pension credit or attendance allowance, and whether the deceased was entitled to make this claim, and if so, whether any funds need to be paid to or from the estate following death.
Changes in income, savings and periods of time spent in hospital can affect an individual’s entitlement to claim certain benefits.
Common reasons for a DWP enquiry
A DWP enquiry may arise where there are questions about:
- savings or capital that may have affected means-tested benefits
- changes in living arrangements
- income or pension entitlement
- benefits that continued to be paid after death
- differences between information held by the DWP and the value of the estate disclosed for probate purposes
Even where the enquiry appears routine, it is important not to assume that no further action will follow, and to wait for DWP to confirm that their investigation has been concluded.
What documents should you provide?
The personal representative will be asked to gather information as to the value of the deceased’s estate at the date of their death, and information as to their sources of income, so that this can be compared to the DWP’s records.
If the deceased had a financial advisor, they may be able to help assist with investment records during the lifetime of the deceased.
The personal representative should also ensure they keep a record of any debts and liabilities due to or from the estate, as well as any funeral expenses that have been incurred.
What should you do if you receive a DWP letter?
The first point is not to panic. A letter from the DWP does not automatically mean that money is owed. However, it should not be ignored and should be dealt with in a timely manner to avoid delay.
Often, the DWP will ask you to treat their investigation as a claim against the estate and will ask you not to distribute the estate until the investigation has been completed.
Check what information has been requested
Read the letter carefully to identify exactly what information is being asked for and make a note of any deadline for your response. Some enquiries are straightforward, but others may require a more detailed review of the estate papers.
• Do not ignore the letter - even if the request feels routine or you feel it may not even be relevant; it should still be responded to and dealt with promptly.
• Check the deadline
• Avoid distributing the estate too soon
• Take advice if anything is unclear
Of course, if you are worried about meeting the deadline imposed by the DWP then you should call them to explain the reasons why your response will be delayed and to see if they will agree a time extension for your response.
Can the DWP recover overpaid benefits from the estate?
Yes. If the DWP concludes that benefits were overpaid during the deceased's lifetime, then they will seek repayment from the estate before assets are distributed to beneficiaries.
This is because the estate must settle the deceased's debts and liabilities before any inheritance is paid out to beneficiaries.
A DWP claim should be considered alongside the other debts and liabilities of the estate.
Whether any sum is properly repayable will depend on the facts. The amount claimed should not simply be accepted without the Personal Representatives being satisfied that the amount being reclaimed is correct. Personal Representatives should check that the claim is clear, properly explained, and supported by the information available.
What happens if the estate has already been distributed?
If you have already paid the beneficiaries their entitlement, and you receive a letter from the DWP about a potential claim, then you should contact all the beneficiaries to explain to them that there could be money which needs to be repaid from the estate.
Whilst this will put the beneficiaries on notice that funds may need to be repaid, it doesn’t mean that they will still have the funds available to them. For this reason, it is important to settle matters with the DWP and other creditors before making any distributions.
If you have already distributed the estate and a claim is correctly made by the DWP then you may find yourself personally liable for the amount due as personal representative.
Can the DWP's decision be challenged?
If you feel the DWP decision is incorrect, then it is for the personal representatives of the deceased’s estate to challenge the decision. This is because they are responsible for administering the estate and addressing any claims made to it.
A way of doing this, could be to seek clarification or evidence from the DWP regarding the claim. This would allow you to check the calculation and account for it when administering the estate.
Can an executor be personally liable?
This is often one of the main concerns for personal representatives. In general, the estate's debts should be paid from estate funds rather than from the personal representative's own money.
However, problems can arise if the estate is distributed before known liabilities have been resolved.
It is therefore important to review all outstanding matters and settle liabilities before an estate is distributed and finalised.
If a personal representative distributes the estate too early, they could run in difficulties particularly, if further sums are owned from the deceased’s estate.
A way that personal representatives can protect themselves from liability for claims made after an estate is administered would be to place statutory notices under section 27 of the Trustee Act 1925 (also known as section 27 notices). These notices provide protection against claims from unknown creditors or beneficiaries.
Section 27 notices do not protect personal representatives from claims they were aware of at the time of distribution.
Obtaining professional advice when dealing with an estate can often assist and protect against these kinds of mistakes.
When personal risk can arise
A personal representative may face difficulties if they:
- ignore a known claim
- distribute funds before dealing with an outstanding enquiry
- fail to make reasonable investigations into the estate's liabilities
- cannot recover money already paid to beneficiaries
That does not mean that every DWP enquiry creates personal liability. It does mean that personal representatives should proceed with care, particularly where there is uncertainty about the value of the claim or the solvency of the estate.
When should you seek legal advice?
A DWP investigation may be routine but it can also raise difficult questions about overpayments, estate liabilities, and the timing of distributions.
If you have received a letter from the DWP and are unsure how to respond, or if you are worried about whether an estate has already been distributed too soon, it is sensible to take advice before matters become more complex.
Early guidance can help clarify what information should be provided, whether any repayment is properly due, and how best to protect personal representatives during the administration of the estate.
How Timms Can Help
If you have received a letter from the Department for Work and Pensions and would like advice on the next steps, our Wills and Probate team can help you understand your position and deal with the matter as part of the estate administration process.
Our team can be contacted on freephone 0800 011 6666 or via email at legal@timms-law.com.
Frequently Asked Questions
Can the DWP recover overpaid benefits from a deceased person's estate?
Yes, in some circumstances the DWP may seek repayment from the estate if it concludes that benefits were overpaid during the deceased’s lifetime.
Should I distribute the estate while the DWP is investigating?
Caution is usually needed. If the enquiry is unresolved, distributing the estate too early may create avoidable difficulty for the personal representative.
Do I have to pay the DWP from my own money?
Usually, estate liabilities are paid from estate funds rather than personally. However, personal risk can arise if the estate is distributed before known liabilities are dealt with.
What if I disagree with the amount the DWP is claiming?
The claim should be reviewed carefully. If the basis of the demand is unclear or appears inaccurate, further information or advice should be sought before payment is made.
