Can a will be changed after death?

Can a will be changed after death? Our parents have “mirror” wills – leaving everything to each other. However, our mother has gone into a care home
and my sister and I are concerned that, were our father to die, his assets would be taken by the local authority to pay for our mother’s care. Our parents’ assets total about £800,000, of which about half is the value of their property. Is there anything we should be doing with the ownership of the house now (transferring it to my sister and I?) or with our parents’ wills?

Matthew Woods, partner at solicitors Withers, says that local authority help with your mother’s care home fees will be means tested. As your mother has more than £23,000 of assets she is potentially liable for the full costs of her care. When assessing your mother’s means, it is only her assets and her share of joint assets that will be taken into account – your father’s assets and share of joint assets will be ignored. For now, your mother’s interest in the property will also be ignored as your father is living in it. This means that the property could not be sold if your mother’s other assets were used up paying for her care fees.

However, if your father were to die or go into a care home, the position would change significantly. Your mother’s interest in the property would be taken into account in the same way as her other assets and if your mother inherited assets under your father’s will then these would also be taken into account and used to pay care home fees.

It would not be advisable for either parent to transfer their share of their property to you and your sister. There may be concerns about your mother’s capacity to make such a gift but, more importantly, her local authority is likely to ignore any transfer and continue to assess your mother as if she still owned an interest in the property. Your father may also have concerns about the security of his home if he transfers his interest to you and your sister while he continues to live in it.

Your father should amend his will immediately so that instead of leaving everything to your mother, his assets are left in flexible trusts for the potential benefit of your mother, you and your sister. Your father’s executors could then consider what is best at the time of his death. The position concerning contribution to care fees could also be different.

Although it is possible to reorganise matters after your father’s death this could be difficult, particularly if your mother does not have sufficient mental capacity at that time, in which case an application to the Court of Protection would be required. If your mother did have sufficient capacity, it may be possible for her to enter into a deed of variation of your father’s will, under which some, or all, of her entitlement could be redirected to you and your sister. However, the inheritance tax (IHT) consequences of the deed should be considered, and the local authority is very likely to continue to assess your mother as if she still owned the assets.

Need to allocate pension benefits

How important is designating who would be the beneficiary of my pensions in the event of my death? I have a range of occupational and personal pension funds and in the past I have been asked to fill in forms nominating beneficiaries for the occupational, but not the personal pensions. I have recently married but have no children. Would the benefits automatically go to my wife (as I wish) or do I need to fill out forms for each pension?

Tom McPhail, head of pensions research at Hargreaves Lansdown, the financial adviser, says that pension scheme trustees normally have discretion over who receives any death benefits from a pension – whether lump sum or lifetime income – and most of the time it is fairly straightforward to determine who should receive the money. This means that even if you haven’t completed a death benefit instruction it is perfectly possible that after your death, payments will be made in the manner you would have desired. This is the case with both occupational and personal pensions.

However, it is also important to bear in mind that, because the trustees do have discretion, the payment decisions can be challenged, even if you have left instructions.

Where a scheme member has remarried and the member has omitted to update their instructions, the trustees may take into account the needs of the member’s subsequent spouse, even if the instruction specifies that benefits should be paid to the ex-spouse. However, where the instruction is out-of-date, surviving spouses should be prepared to challenge entitlements.

Clearly, the more explicit your instructions and the more up-to-date they are, the more likely it is that they will be helpful in guiding trustee decisions, so it is recommended that all pension investors
should always complete death benefit nomination instructions and keep
them up to date. In addition, the fact that pension benefits are subject to a discretionary trust means that they will normally fall outside your estate for IHT purposes.

The advice in this column is specific to the facts surrounding the questions posed. Neither the FT nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.