DIY 'Deed of Variance'

cheerfulcat

Hello, willam

Here's an explanation of the term

http://www.hmrc.gov.uk/leaflets/iht2.htm#b

Basically it means that you can't for example give your home away and continue to live in it.

Some more info on deeds of variation here

http://www.ts-p.co.uk/information_sheets/Deeds%20of%20Variation.pdf

And here's the website of the Society of Trust and Estate Practioners, where you can find a suitably qualified solicitor in your area

http://www.step.org/

Regards

Cheerfulcat

CGG

Just see a Solicitor. You can get a free initial 1/2 hour consulation with some by quoting the Thomson directory. It's ridiculous trying to cut corners where tax implications and Wills are concerned.

willam

Cheerfulcat: Thanks. I can't download the middle link,-the pdf. Other two are ok. I'll see if I can break it down later. I'm keen to know more about Deed of V.

CGG: I appreciate your intention, but please don't be offended if I say it's not quite on my wavelength. At the risk of being a bore let me explain...

In the 1980's as executor I sold my father's house in Harrow. It was one of the new Nash estates when 1926 we moved in (I was four). So there were no complications, easy to value as it was one of many changing hands. I was shocked when the solicitor (recommended by my estate agent) said he expected conveyancing to be between £600 and £900. At that time conveyancy shops were starting up, -and a very cheap way of transferring property ownership. My wife was worried that route was a risk, and our saviour was an ad in the Daily Telegraph by a firm of solicitors in Lancashire, counter-acting the bucket shops by offering conveyance of any property on UK mainland for (I think) £150. There were exception clauses, of course, but none to do with father's house. I checked the firm with Law Society, they were OK, and actually had a chain of branches in the NE.
They were absolutely splendid, and no extras added to the bill.
My point is this. I had been told £900 was small price to pay for security compared to the £55k at risk. "It's rediculous to cut corners" was one expression, now echoed by you. In retrospect, was it?

Thank you for commenting. willam

cheerfulcat

willam, spot the difference

willam wrote:

Why must I have a solicitor? The bank suggests it's mandatory. But if I write a statement of my wish, date it, and have it witnessed by my children, would this not be good enough for the Tax Revenue people at my demise?

our saviour was an ad in the Daily Telegraph by a firm of solicitors in Lancashire,

carlih1

Hi

I do think you should have a consultation with a solicitors, my solicitors do half hour free and most do this now.

Was just wondering if you transfer your share to your children ,do you lose your nil rate band?

e.g if your wife died she is entitled to £275,000 tax free on her estate, then when you die you are entitled to that also, just thinking if you vary your wifes Will would you only get one lot of £275,000 tax free, i know this wouldn't affect you, but it would affect your beneficiaries!

Good luck

C

willam

Thanks carlih1. Do I lose nil rate band? Regarding income tax I shall lose marriage allowance, but I shall claim the elderly relief allowance which I have not done up to now because of capping.
If you refer to the nil rate band for Inheritance Tax, my wife's estate is under £275K, so all of it escapes the tax. Our house is in my name only, that with other assets puts me in the Inheritance Tax bracket. When I die, her savings that come to me will then be docked 40%.
Have I understood and answered your post?
Thanks again, willam

Sunset_3

William

First post ever on this forum but have been reading for about 6 mths and gained lots of useful help so thought I'd post my experience of deed of variation in case it's of any use.
My step-father died leaving all his estate to my mum but under inheritance tax threshold in any case. 13 mths later my mum died, combined estate now over threshold. I trawled the internet and found a site saying I could vary my step-fathers will to leave a chunk of money to myself and my step-sister rather than it all going to my mother thus resulting in the remainder of the estate being under inheritance tax threshold. A friend who is a legal academic provided me with a copy of a standard form which I used to draft out a deed of variation covering what I wanted to do. I then sent it to the solicitor who drafted out my parents wills, as he seemed reasonable. I wanted someone to sue if need be! He charged me just over £100 and in return tidied up the wording and gave me the security of having someone I could try to get re-dress from if need be. There is a statement in the deed of variation saying it is drafted to be applicable for tax purposes - would have to look up the exact wording which quotes schedules etc. Believe it or not I got that right in my original draft but the solicitor got it wrong in his version - didn't spot it until I was submitting stuff to capital taxes dept when acting as executor to mum's will but interesting 'phone call and correspondence with solicitor thereafter! My step-sister and I had to sign the deed of variation as beneficiaries and my husband and I as executors of the wills. Have now submitted all the stuff to capital taxes and they have accepted it and sent confirmation that no tax is due.
My cousin tried to do a deed of variation when his father-in-law died - his solicitor was most unhelpful and estimated the cost of doing the work as nearly £1000. My cousin didn't pursue it - too much emotionally etc at the time.

Hope this helps.

willam

Sunset: I am very grateful you posted this, and I especially appreciate you mention the emotional stress we can be under when making such important financial plans.

My first step is to find out if the tax authority will accept a clear statement in the required form as a deed that I wish money be given to our children instead of me. The law accepts the principle, so I ask that I can manage it without professional legal help. And if not why not?
If I fail, I shall seek for legal advice, but not do that before costing approx. legal bill.
If all fails and Inland Revenue forever insists such money is a gift from me to our children and not from their mother, then my last hope is to survive seven years and that way settle the matter.
Thanks again for your interesting post. willam

willam

cheerfulcat, re 'Spot the difference'

First statement pleads no lawyer necessary for Inland Revenue to accept the right of an elderly widower redirect his late wife's savings to their children where all interested agree.

Second statement refers to conveyance of land/property which by law requires legal firm or licensed conveyer. I don't disagree with that, the insurance for what could go wrong would swallow the gain going professional. I was glad the solicitor faced up to the then newly licensed competition by dramatically cutting costs.
Sorry not to answer that one earlier... Sunset's helpful post is right to mention the stress, I do appreciate all the comments.

Thanks, willam

shibumi

Sunset wrote:

William

First post ever on this forum but have been reading for about 6 mths and gained lots of useful help so thought I'd post my experience of deed of variation in case it's of any use.
My step-father died leaving all his estate to my mum but under inheritance tax threshold in any case. 13 mths later my mum died, combined estate now over threshold. I trawled the internet and found a site saying I could vary my step-fathers will to leave a chunk of money to myself and my step-sister rather than it all going to my mother thus resulting in the remainder of the estate being under inheritance tax threshold. A friend who is a legal academic provided me with a copy of a standard form which I used to draft out a deed of variation covering what I wanted to do. I then sent it to the solicitor who drafted out my parents wills, as he seemed reasonable. I wanted someone to sue if need be! He charged me just over £100 and in return tidied up the wording and gave me the security of having someone I could try to get re-dress from if need be. There is a statement in the deed of variation saying it is drafted to be applicable for tax purposes - would have to look up the exact wording which quotes schedules etc. Believe it or not I got that right in my original draft but the solicitor got it wrong in his version - didn't spot it until I was submitting stuff to capital taxes dept when acting as executor to mum's will but interesting 'phone call and correspondence with solicitor thereafter! My step-sister and I had to sign the deed of variation as beneficiaries and my husband and I as executors of the wills. Have now submitted all the stuff to capital taxes and they have accepted it and sent confirmation that no tax is due.
My cousin tried to do a deed of variation when his father-in-law died - his solicitor was most unhelpful and estimated the cost of doing the work as nearly £1000. My cousin didn't pursue it - too much emotionally etc at the time.

Hope this helps.

I am a little concerned by your cousins story - we went ahead with a deed of variation after my father died leaving no will. The cost was about £1000 and the solicitor left me with no confidence that he knew what he was doing....in fact he had no idea how the trust set up would be taxed!!!

A number of questions have since come to mind:
1. Is there anyway of checking that the solicitor did do everything correctly?
2. Should we have informed the IR of the trusts existence ? Or do we wait until the trust is wound up before involving the IR??


Obviously if the IR are not happy with his wording I'd rather find out sooner than later and don't want to go down the route of suing solicitors in many years to come.

Thanks