Mar 12 2009

Post-death Arrangements and Deed of Variation

The way an estate is left on death is not necessarily final. Post-death Arrangements are allowed in certain circumstances.

A beneficiary in a Will can effectively re-direct property s/he has inherited under the Will and avoid the tax implications of the inheritance, if the statutory requirements are followed.

A Deed of Variation can be completed and delivered to bring about the desired changes but it can only be used within 2 years of a person’s death.

Frequently a Deed of Variation is used to redistribute the deceased’s property to mitigate Inheritance Tax (IHT) or Capital Gains Tax (CGT) liability between generations but there are other potential reasons. Some examples could be

  • Wealthy beneficiaries who have children might want to divert their inheritance directly to their children so that their own IHT liability is minimised.
  • A way of balancing the legacies between beneficiaries e.g. a brothers might be given different percentages but would prefer if they inherited the same amount.
  • A way of balancing wealth e.g. a wealthy sister being left an equal share of the parents estate might agree to alter the percentages so that the poorer sister receives more.

    • A Deed of Variation can only be used if:

  • everyone adversely affected agrees
  • no one is compensated for what they give away
  • none of the assets are a Gift With Reservation

    • Also, if the variation affects the rights of children or even unborn children, Court approval will be necessary.

    Warning

    It is not a good idea to write a basic pair of mirror wills and rely on using use a Deed of Variation on death to bring the deceased estate in line with current legislation after death. There is no certainty that this option will be available in the future as it may well be seen as a tax avoidance ‘loophole’ that needs closing.

    Everyone should write a will that best suits the personal and family situation in line with current legislation and change provisions in the will if needed after changes in legislation..

    For further information and advice or if you need to use a Deed of Variation please call on FREEPHONE 0800 878 6565 or 07942 959599 or use our contact page and we will call you back within one working day.

    Bill Ryan

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