Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • pmortl
    • By pmortl 14th Jun 17, 12:36 PM
    • 16Posts
    • 3Thanks
    pmortl
    Deed of variation or Gift???
    • #1
    • 14th Jun 17, 12:36 PM
    Deed of variation or Gift??? 14th Jun 17 at 12:36 PM
    My father passed nearly 2 years ago, leaving estate (just money less than £5K) to my mother entirely. We took over ongoing medical negligence claim which has now completed with about £90K been left to my mother as part of the will. It was my father's and my mother's wish that the money go to me. What is the correct way to pass this money to me and not their other children. My mother has given a letter of intent, but is this enough? I have a basic knowledge of deed of variation which can redirect some or all of an estate to someone not mentioned in my father's will but this is only 1 month away from the 2 year cutoff point. Could the money simply be gifted as it is well under any kind of Inheritance Tax (IHT) constraints?
    Many thanks in advance of your answers.
    Newbie MB'er, fingers x'ed (11/02/2011)
Page 1
    • Yorkshireman99
    • By Yorkshireman99 14th Jun 17, 12:48 PM
    • 2,784 Posts
    • 2,209 Thanks
    Yorkshireman99
    • #2
    • 14th Jun 17, 12:48 PM
    • #2
    • 14th Jun 17, 12:48 PM
    Did either parent leave a will? If not the intestacy rules will apply. If so the £90K would be divided equally between the children. They could do a DOV but they have no legal obligation to do so. The letter of intent has no standing I.e. It is not a will
    Last edited by Yorkshireman99; 14-06-2017 at 2:58 PM.
    • pmortl
    • By pmortl 14th Jun 17, 1:15 PM
    • 16 Posts
    • 3 Thanks
    pmortl
    • #3
    • 14th Jun 17, 1:15 PM
    • #3
    • 14th Jun 17, 1:15 PM
    Yes, dad left a will leaving everything to mum, mum has will leaving any proceeds to us, but the case has finished and the money is becoming available, ie put into executor bank account. They had both intended the money to come to us. What is a DOA (I hope not department of agriculture )
    As mentioned, would a deed of variation be appropriate or would a gift be simpler, ie no IHT to pay,
    Newbie MB'er, fingers x'ed (11/02/2011)
    • SevenOfNine
    • By SevenOfNine 14th Jun 17, 1:18 PM
    • 1,097 Posts
    • 1,035 Thanks
    SevenOfNine
    • #4
    • 14th Jun 17, 1:18 PM
    • #4
    • 14th Jun 17, 1:18 PM
    We inherited an intestate estate. Considered 'gifting' route but as life expectancy for anyone/everyone is never certain, we did not want to 'assume' living for a further 7 years & trip over IHT rules!

    Took advise from a STEP member solicitor & a DoV has just been drawn up, together with a 'Notional Will' specifying the inheritance pathway our son would have wanted had he made the Will himself. It would be marginally different for your late father & mother given that it seems there was a Will, not a problem as long as she was sole beneficiary of his estate.

    You could face difficulty from the Local Authority if your mother may have need of a care home. Passing this money to you won't necessarily mean she can be accused of deprivation of assets, but it's best you have a clear understanding of it. This link may go some way to helping http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

    You have 2 years from DoD to complete the Variation, not impossible to DiY but I wouldn't, though we did investigate it, think there was even a form on the Gov.UK website.

    The DoV must make reference to the provisions of section 142(1) Inheritance Tax Act 1984 & section 62(6) Taxation of Chargeable Gains Act 1992.

    You'll have to be quick if you want a solicitor to undertake this for you.
    Seen it all, done it all, can't remember most of it.
    • getmore4less
    • By getmore4less 14th Jun 17, 2:20 PM
    • 29,463 Posts
    • 17,610 Thanks
    getmore4less
    • #5
    • 14th Jun 17, 2:20 PM
    • #5
    • 14th Jun 17, 2:20 PM
    DOV would be a waste of money there is no tax saving.
    • SevenOfNine
    • By SevenOfNine 14th Jun 17, 2:33 PM
    • 1,097 Posts
    • 1,035 Thanks
    SevenOfNine
    • #6
    • 14th Jun 17, 2:33 PM
    • #6
    • 14th Jun 17, 2:33 PM
    DOV would be a waste of money there is no tax saving.
    Originally posted by getmore4less
    Based on the assumption mother has nothing substantial of her own & if she has that she doesn't die in the near future!
    Seen it all, done it all, can't remember most of it.
    • Yorkshireman99
    • By Yorkshireman99 14th Jun 17, 2:56 PM
    • 2,784 Posts
    • 2,209 Thanks
    Yorkshireman99
    • #7
    • 14th Jun 17, 2:56 PM
    • #7
    • 14th Jun 17, 2:56 PM
    DOA was a typo! Sorry! A DOV would not save anything unless there are potential IHT issues and in any cas the donor has to survive seven years from the gift date.
    Last edited by Yorkshireman99; 14-06-2017 at 3:08 PM.
    • getmore4less
    • By getmore4less 14th Jun 17, 4:19 PM
    • 29,463 Posts
    • 17,610 Thanks
    getmore4less
    • #8
    • 14th Jun 17, 4:19 PM
    • #8
    • 14th Jun 17, 4:19 PM
    DOV would be a waste of money there is no tax saving.
    Originally posted by getmore4less
    Based on the assumption mother has nothing substantial of her own & if she has that she doesn't die in the near future!
    Originally posted by SevenOfNine
    NO.

    based on the assumption the mother is a spouse.

    you need to explain why you think a DOV would save TAX
    Last edited by getmore4less; 14-06-2017 at 4:23 PM.
    • MichelleUK
    • By MichelleUK 14th Jun 17, 4:35 PM
    • 287 Posts
    • 172 Thanks
    MichelleUK
    • #9
    • 14th Jun 17, 4:35 PM
    • #9
    • 14th Jun 17, 4:35 PM
    A DOV could be very useful in your case.

    By using a DOV, there would be no requirement for your mother to survive 7 years for it not to be included in her estate, unlike a gift. The DOV does not need to cost anything, as it is not necessary to get a solicitor to write it, you can easily do it yourself*.

    As already mentioned, it would be worth you checking the rules regarding deprivation of assets and seeing if it affects your particular circumstances.

    *Link to HMRC guidance on the drafting of a DOV, but you would not require the IHT bits or need to send them a copy:

    https://www.gov.uk/alter-a-will-after-a-death
    • getmore4less
    • By getmore4less 14th Jun 17, 4:54 PM
    • 29,463 Posts
    • 17,610 Thanks
    getmore4less
    A DOV could be very useful in your case.

    By using a DOV, there would be no requirement for your mother to survive 7 years for it not to be included in her estate, unlike a gift. The DOV does not need to cost anything, as it is not necessary to get a solicitor to write it, you can easily do it yourself*.

    As already mentioned, it would be worth you checking the rules regarding deprivation of assets and seeing if it affects your particular circumstances.

    *Link to HMRC guidance on the drafting of a DOV, but you would not require the IHT bits or need to send them a copy:

    https://www.gov.uk/alter-a-will-after-a-death
    Originally posted by MichelleUK
    A DOV will remove the same amount of transferable nil rate band if the mother is spouse of the father.

    gifting will be IHT neutral for 7 years then add the size of the gift to the survivors nil rate band.
    • Keep pedalling
    • By Keep pedalling 14th Jun 17, 5:19 PM
    • 3,435 Posts
    • 3,703 Thanks
    Keep pedalling
    Does you mother have other assets to support her in her old age? If not she would be extremely foolish to give this away.
    • MichelleUK
    • By MichelleUK 14th Jun 17, 5:30 PM
    • 287 Posts
    • 172 Thanks
    MichelleUK
    A DOV will remove the same amount of transferable nil rate band if the mother is spouse of the father.

    gifting will be IHT neutral for 7 years then add the size of the gift to the survivors nil rate band.
    Originally posted by getmore4less
    Ahhhhh, beat me to it! I was just coming back to edit my post, as I had forgotten that it would use up £90k of the fathers band......
    • pmortl
    • By pmortl 14th Jun 17, 6:03 PM
    • 16 Posts
    • 3 Thanks
    pmortl
    My mother is living in a council house and has her pensions, she wants nothing to do with the money, she doesn't have any benefits that are means tested in that she already has over £16K before this money hits the executor account and is happy with what she has, there are no assets. Don't worry, we're not strong arming or anything, it was both my father's and my mother's wishes, just unfortunately worded Will in that left everything to mum, obviously something we didn't look at closely, otherwise would have saved on money for DOV. (quote of 450 to 750 + VAT)
    So it seems a DOV is the correct legal way to go to allow the sole beneficiary (my mum) to redirect the claim award part of the will to whoever she decides. Does this seem correct? Thanks
    Last edited by pmortl; 14-06-2017 at 6:08 PM. Reason: Missed some info
    Newbie MB'er, fingers x'ed (11/02/2011)
    • Mojisola
    • By Mojisola 14th Jun 17, 6:19 PM
    • 27,982 Posts
    • 71,140 Thanks
    Mojisola
    My mother is living in a council house and has her pensions, she wants nothing to do with the money, she doesn't have any benefits that are means tested in that she already has over £16K before this money hits the executor account and is happy with what she has, there are no assets. Don't worry, we're not strong arming or anything, it was both my father's and my mother's wishes, just unfortunately worded Will in that left everything to mum
    Originally posted by pmortl
    She might not but, if she needs care, the council will unless she had a very large sum in savings.

    Read up on DOA - deprivation of assets - before Mum gives it away and the money gets spent.
    • getmore4less
    • By getmore4less 14th Jun 17, 6:37 PM
    • 29,463 Posts
    • 17,610 Thanks
    getmore4less
    My mother is living in a council house and has her pensions, she wants nothing to do with the money, she doesn't have any benefits that are means tested in that she already has over £16K before this money hits the executor account and is happy with what she has, there are no assets. Don't worry, we're not strong arming or anything, it was both my father's and my mother's wishes, just unfortunately worded Will in that left everything to mum, obviously something we didn't look at closely, otherwise would have saved on money for DOV. (quote of 450 to 750 + VAT)
    So it seems a DOV is the correct legal way to go to allow the sole beneficiary (my mum) to redirect the claim award part of the will to whoever she decides. Does this seem correct? Thanks
    Originally posted by pmortl
    A DOV is still a gift just has tax benefits.

    There are no tax benefits over a normal gift why bother.
    • pmortl
    • By pmortl 14th Jun 17, 6:42 PM
    • 16 Posts
    • 3 Thanks
    pmortl
    Read up on DOA - deprivation of assets - before Mum gives it away and the money gets spent.
    Originally posted by Mojisola
    Many thanks for your input, regarding the DOA there is already a care plan in place for my mother when she needs it which was put in place many years ago and both mum and dad provided for this.

    Regarding the DOV, is the DIY version easy to do or just bite the bullet and get it done by a solicitor, there is only mum as beneficiary, no impact on IHT as only £90K, is this all we need to consider?
    Newbie MB'er, fingers x'ed (11/02/2011)
    • Yorkshireman99
    • By Yorkshireman99 14th Jun 17, 6:56 PM
    • 2,784 Posts
    • 2,209 Thanks
    Yorkshireman99
    Many thanks for your input, regarding the DOA there is already a care plan in place for my mother when she needs it which was put in place many years ago and both mum and dad provided for this.

    Regarding the DOV, is the DIY version easy to do or just bite the bullet and get it done by a solicitor, there is only mum as beneficiary, no impact on IHT as only £90K, is this all we need to consider?
    Originally posted by pmortl
    Does the amount for the claim actually form, an albeit delayed, part of your father's estate?
    • pmortl
    • By pmortl 14th Jun 17, 8:12 PM
    • 16 Posts
    • 3 Thanks
    pmortl
    Yes, on the will it states all proceeds to go to my wife
    Newbie MB'er, fingers x'ed (11/02/2011)
    • securityguy
    • By securityguy 14th Jun 17, 8:23 PM
    • 2,387 Posts
    • 3,630 Thanks
    securityguy
    The usual reason for using a DoV to transfer money from parent to (say) grandchild rather than parent to child is that if the child dies within seven years AND has themselves an estate (including the gift) that is subject to IHT, then there will be IHT, whereas by transferring it direct to the grandchild that is avoided. It's not clear to me from the account of what's going on as to why a DoV to give money to the child, rather than a spouse, helps.

    It's also not obvious from the OP as to why the other children of the claimant would be willing to sign a DoV.

    There is a Deprivation of Assets issue if and only if the mother is currently likely to require care in the immediate future.

    I can't really see why the DoV is needed.
    • Keep pedalling
    • By Keep pedalling 14th Jun 17, 8:58 PM
    • 3,435 Posts
    • 3,703 Thanks
    Keep pedalling
    Many thanks for your input, regarding the DOA there is already a care plan in place for my mother when she needs it which was put in place many years ago and both mum and dad provided for this.

    Regarding the DOV, is the DIY version easy to do or just bite the bullet and get it done by a solicitor, there is only mum as beneficiary, no impact on IHT as only £90K, is this all we need to consider?
    Originally posted by pmortl
    Baring in mind that you parents have very little in the way of assets how on earth did they manage to finance this?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

157Posts Today

1,065Users online

Martin's Twitter