deed of variation

sloughflint

samiam85 wrote: »

i guess iht is an issue. if she gifts me the money, and then my granny dies she will have more money, above 310k and then if she dies in the next 7 years, i hope she doesn't then i will have to pay iht on all of it.
normally i wouldn't think about this but my dad has left many holes.

thanks

If IHT is an issue and you think your mother's estate is likely to increase then I would say your proposition of a deed of variation is less IHT favourable.

Suppose your father's estate was exactly the current single IHT allowance of 312k and your mother died with an estate of 360k when the allowance is 350k.

If your Mum varied your father's Will so that his estate went to you now, upon her death there would be an IHT liability on 10k.

If however things remained as they are and your father's estate passed to your Mum, whilst her estate would be 672k, her allowance would be 700k ( due to uplifting her husband's allowance) so no IHT to pay.

Simply gifting some of her inheritance to you now if she wished would be better since she would have a greater IHT allowance ( double the allowance at time of death).
Hopefully she won't die within 7 years but even if she did, there are annual gift from capital allowances of 3k ( 6k if allowance not used the year before) and gift from income allowances to consider.

margaretclare

Caroline73 wrote: »

like a lot of people on this site he has 30 accounts because he moved money when the rates changed (or when the wind changed, whichever came first) and my mum cant cope with all the changing and money moving.

I know that anything other than bog standard accounts would leave my mother petrified, I imagine the OP mother is the same, especially being as the the father had so many accounts, he was possibly in charge of all the money.

'Petrified?' Why? I'd only be 'petrified' if someone came at me with an assault rifle or some such.

All she needs to do is to close 29 of the 30 accounts and have all the money in the remaining one. Simple.

Errata

margaretclare wrote: »

All she needs to do is to close 29 of the 30 accounts and have all the money in the remaining one. Simple.

Not her job, that's for the executor(s) to deal with and then hand over one single cheque.

localhero

A Deed of Variation would be costly and wouldn't make administering the estate any easier.

And as Sloughflint has correctly worked out, there would be no IHT benefit to doing one - quite the opposite.

samiam85

edit : my parents are not married so she would not carry the iht allowance of my father

All she needs to do is to close 29 of the 30 accounts and have all the money in the remaining one. Simple.

currently banks are falling apart , i think having more than 50k in each bank is stupid and so we are talking about a minimum of 6 accounts.

sloughflint

samiam85 wrote: »

edit : my parents are not married so she would not carry the iht allowance of my father

samiam85 wrote: »

i guess iht is an issue. if she gifts me the money, and then my granny dies she will have more money, above 310k and then if she dies in the next 7 years, i hope she doesn't then i will have to pay iht on all of it.

I suppose then it depends on just how sizeable your parents' assets were and likelihood of surviving 7 years whether it is worthwhile spending a few hundred on a DOV now.

Depending on what your primary concern is:

If IHT and your mother's estate ( including your father's assets) is not too far above a single allowance, she might just consider it more worthwhile using her gift allowances each year and do a deed of variation on any inheritance she might receive in the future.

If the logistics of numerous accounts, perhaps investing in a Lasting Power of Attorney might be a good idea so that you could manage her finances for her. Forms and guidance here:

http://www.publicguardian.gov.uk/arrangements/lpa.htm
http://www.publicguardian.gov.uk/arrangements/how-to-lpa.htm

Confused39

Quoted on 25-03-09 "Hopefully she won't die within 7 years but even if she did, there are annual gift from capital allowances of 3k ( 6k if allowance not used the year before) and gift from income allowances to consider." I may sound thick but can someone please help me and explain or direct me to a site that can explain how the capital allowances and income allowances gifting works? I am in the situation where my mother is in a nursing home and is self funding and I want to get her savings down.

John_Pierpoint

I think you are confusing avoiding Inheritance tax with evading nursing home fees.

You need to post a reasonably detailed statement of your mother's TOTAL assets (including potential death benefits such as life insurance policies. Plus details of her income: pensions annuities etc.
Plus some indications of her age and personal relationships.
Is she compos mentis ?
en.wikipedia.org/wiki/Non_compos_mentis
Does she have dependants, eg husband other children especially any handicapped ones?
Do you have a power of attorney, if so what sort?

Probably best to start your own thread as this is meant to be about Deeds of Variation, you cannot do one of those before she dies.

John_Pierpoint

You can do a deed of variation of just your share of an estate after the death, if you for example want to leave your inheritance to a younger generation, who will be able to enjoy it longer and maybe need it.