Deed of variation or Gift???
pmortl
Posts: 30 Forumite
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.
Many thanks in advance of your answers.
Mortgage Started Nov 2018
2 year fixed 1.78%, £336pcm, 23yrs 2 mths remaining
Deal ends 30/11/2019
Current Balance 23/8/2018 £76K
Want to be Mortgage Free by Dec 2022
2 year fixed 1.78%, £336pcm, 23yrs 2 mths remaining
Deal ends 30/11/2019
Current Balance 23/8/2018 £76K
Want to be Mortgage Free by Dec 2022
0
Comments
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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 will0
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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
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As mentioned, would a deed of variation be appropriate or would a gift be simpler, ie no IHT to pay,Mortgage Started Nov 2018
2 year fixed 1.78%, £336pcm, 23yrs 2 mths remaining
Deal ends 30/11/2019
Current Balance 23/8/2018 £76K
Want to be Mortgage Free by Dec 20220 -
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.0 -
DOV would be a waste of money there is no tax saving.0
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getmore4less wrote: »DOV would be a waste of money there is no tax saving.
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.0 -
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.0
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getmore4less wrote: »DOV would be a waste of money there is no tax saving.SevenOfNine wrote: »Based on the assumption mother has nothing substantial of her own & if she has that she doesn't die in the near future!
NO.
based on the assumption the mother is a spouse.
you need to explain why you think a DOV would save TAX0 -
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-death0 -
MichelleUK wrote: »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
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.0 -
Does you mother have other assets to support her in her old age? If not she would be extremely foolish to give this away.0
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