A recent story on the BBC News website, regarding a man who was jailed for sharing his father's industrial compensation, brought home the stark reality of how easily the situation could have been avoided just through seeking wealth protection advice.

John Kennedy's father died of asbestosis in 2001 and after his death he shared the compensation with family members in accordance with his father's spoken wishes. No Will or specialised Industrial Disease Trust was left.

Before his father's death, John's mother was admitted to a care home and, as the family had limited savings, her care was funded by the Local Authority.

In 2005 £90,000 was paid in compensation for the industrial injury and, as there was no Will or Industrial Disease Trust, all of the funds should have passed to John's mother under an intestacy. These rules state where your money should go if you do not leave a Will.

However John, with good intentions, decided to honour his father's wishes and effectively took charge of the decision as he held a Power of Attorney for his mother. After a family meeting it was decided to share the money between various family members.  

Unknowingly these actions led to devastating consequences and John was charged with benefit fraud, as the money should have passed to his mother to help pay for her nursing care. John was convicted and sentenced to nine months in prison suspended for two years. However, as he was unable to pay the money, which had been spent, he was jailed and served four months in prison. John's criminal record has now affected his employment prospects and each month he has to pay a nominal sum from his benefits towards his outstanding debt.

Since then, due to his mother's health, the family successfully applied for the nursing home fees to be met by the NHS as she qualified for continuing health care and if they had seen a solicitor about this in the first instance then John may never have been charged over the incident.

The final outcome for John could have been avoided by any of the following:

  1. John's father could have made a Will leaving his assets (even future assets) in the way that he would have wanted. That way he would not have been bound by the intestacy rules.

  2. John's father could have set up an Industrial Disease Trust before he died asking for funds in the future to be placed in Trust and be divided how his chosen Trustees saw fit. A private Letter of Wishes from John's father to the Trustees would have guided them and the Trust could have been set up with a £10 loan which would then be repaid when the funds finally came through. This is more complicated than a Will but allows Trustees to distribute in the proportions they see fit at that time rather than set amounts under a Will.

  3. The family should have taken advice about the continuing health care funding for John's mother although health requirements usually have to be quite advanced for this to be granted.

It is understandable that families, where a member has been diagnosed with asbestosis, may not want to have to consider these issues at times of great family stress. However, speaking to a lawyer a little earlier would have avoided the difficult position that John found himself in, probably the last thing that his father would have wanted or anticipated.

Click here to view the BBC article in full.

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