DWP powers of overpayment recovery from a closed estate

Client died while repaying an ongoing overpayment on Income Support due to undisclosed capital. The DWP were notified of the death and demanded full repayment of the remaining overpayment from the estate. This was done, without even an aknowledgement from the DWP. The estate was closed in the correct timely fashion with all creditors paid etc. including the DWP debt. Three months later the DWP wrote saying that they are taking the executor to court for non disclosure of documents they requested listing the value of the estate. Apparently they are trying to see if there is any more money they can get back from the estate. This letter they supposedly sent was never received, nor did they chase this matter up prior to the estate being closed correctly. They are still trying to pursue the matter despite this. Everything I have looked at seems to indicate they have no power in law now the estate is closed and no power to pursue the executor as the estate was dealt with correctly. Can anyone shed any more light on the matter? It is causing terrible distress to the family as the client died unexpectedly at a relatively young age.

First, did the executors post a Section 27 Trustee Act 1925 notice (look it up) before distributing the estate? This gives creditors a time limit to claim against the estate failing which it will be distributed and only those debts known of paid by the excutors. Doing this means that the executors are not personally liable to an unknown creditor who surfaces later. If they don’t do this the claim is not against the estate but the executors personally for failing to carry out their duty to collect, get in and administer the estate according to law.

If they did they are not personally liable but the disappointed creditor may be able to trace the assets of the estate into the hands of the beneficiaries, if they can still be identified. The law states that all debts must be paid before anything is handed over to the beneficiaries, even if that means there is nothing left for them. Tough, but there it is. If the estate was handled by a solicitor they should have done a s 27 notice as a matter of routine - it doesn’t cost very much. They will certainly do it if they themselves are the executors.

DWP really should have looked into the deceased’s affairs properly when they identified the non-disclosure.  If they did, there should not have been anything more in the estate for them to get their hands on.  Given what Ariadne says, perhaps the executor should now send them the documents they are asking for to prove the point.

As an aside, I know of a case where DWP sent a letter (this one did arrive!) asking for documents & warning the executor strongly not to distribute the estate.  It was a PC case & they wanted papers relating to the date PC started - 9 years before!  Of course, the executor didn’t have them.  It got sorted in the end but took 6 months.

Thanks for your replies. I think this one could get messy. The client had a private pension with substantial capital in as well as money in bank accounts, which was accrued while on means-tested benefit. As he lived with his parents he did not have any outgoings. The DWP will now be aware of the amounts he had as they had access to all the details through probate, but maybe not what format it was held in. The executor has responded to their enquiry and declared the private pension appropriately and that the estate is closed and the date it was closed.  Still waiting to hear on the DWP response.

I am not at my best by this time on a Thursday but what are they pursuing the estate for? I thought that all the money owed to the DWP had been paid off before the esate was closed. If it was then why would they want or need any details about the balance etc.

So money built up in his bank accounts.  Surely DWP should have asked for these & identified the amount when they looked into things & determined the overpayment?  If they didn’t do so, is it not arguable it is official error?  Or did further sums build up after that?

As far as the pension is concerned was the money paid out as a death benefit - i.e. something he couldn’t have obtained while alive?  If so, I can’t see how DWP could argue they have any right to it.  If it wasn’t a death benefit, what was it?

I think they are pursuing to see if their original calculation was correct and basically if there is anything they can get their hands on. The executor has looked at the pension, and it was definately a death benefit/private pension, not something that could have been drawn on or closed while alive. My concern is they may look at deprivation of capital as client was squirreling away benefit as living costs so low.  He was very private so his financial affairs have only come to light on his death. His parents has no idea he had this amount of capital. If the DWP do try to make a case for a further overpayment, official error could be a defense.