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Council have man jailed for sharing his late father’s compensation

The story of John Kennedy Jr on the BBC website provides a cautionary tale on the importance of making a Will and getting proper advice.

John’s father, John Kennedy Sr, died from asbestosis. He received £90,000 compensation because the dust and fibres which killed him were inhaled at the Cammell Laird shipyard in Birkenhead where he worked with asbestos.

Mr Kennedy senior advised his son that he wanted the money shared equally between his three sons and grandchildren.

The problems started because he didn’t make a will and relied on his son to follow his wishes. Mr Kennedy died intestate so the compensation passed automatically to his wife, Connie, who was now in a nursing home suffering from Alzheimer’s disease.

John Kennedy Jr

Because she had no property, and little savings, her care was funded by Liverpool City Council. Mrs Kennedy had a Lasting Power of Attorney (LPA) authorising her son John to make financial decisions on her behalf. John Jr used the LPA to ensure his father’s wishes were carried out. After a family meeting he took the money his mother had inherited and distributed it between himself and his brothers.

Liverpool City Council

The council later found out that John Jr had given away his mother’s inheritance and, presumably under the “deprivation of assets” rules, took legal action against him to recover the money. These are anti-avoidance rules to stop a person from giving away assets to qualify for means tested state assistance.

Mr Kennedy was prosecuted and convicted of benefit fraud. Worse, because most of the money had been spent, Mr Kennedy could not afford to repay it all so he was then convicted under the Proceeds of Crime Act 2002 and sent to prison for nine months. Doing “the right thing” has a high price.

This tragedy could have avoided. Had Mr Kennedy Sr made a Will distributing the compensation between his sons & grandchildren the money would not have entered his wife’s estate. Instead it would have been paid directly to them on his death. The council could not have argued that Mrs Kennedy’s estate had been given away in order to receive local authority funding for her care fees.

John Kennedy Jr should also have checked the terms of his mother’s LPA. Every LPA contains a statement confirming that the attorney is only allowed to make gifts out of the donor’s assets on customary occasions (such as birthdays or Christmas) and then only for “reasonable amounts”. It would have been pretty clear that a gift of £90,000 made by an elderly lady with few other assets was not a “reasonable amount”.

Attourney
Attourney

If Mr Kennedy Jr had taken proper advice he would have been told that making the gift exceeded his power under the LPA. It would also have been explained that there was a high probability that the council would challenge under the deprivation of assets rules and the potentially serious consequences.

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