Passing on an inheritance

spitfire21

Hi. I wonder if anyone can help?
My mother in law has just inherited a property and some money, total value around £120,000, from an aunt. She would like to pass the inheritance directly to my wife and her sister.
I understand there is a means by which this can be achieved, which does not involve her actually accepting the legacy.
If that is correct I'd appreciate the thoughts of anyone who has either done this, or who understands how it works.
Thank you.

little_miss_muppet_face

spitfire21 wrote: »

Hi. I wonder if anyone can help?
My mother in law has just inherited a property and some money, total value around £120,000, from an aunt. She would like to pass the inheritance directly to my wife and her sister.
I understand there is a means by which this can be achieved, which does not involve her actually accepting the legacy.
If that is correct I'd appreciate the thoughts of anyone who has either done this, or who understands how it works.
Thank you.

I would be interested in any replies you may receive on this too,, as we will be in the same situation as you very soon.

securityguy

spitfire21 wrote: »

Hi. I wonder if anyone can help?
My mother in law has just inherited a property and some money, total value around £120,000, from an aunt. She would like to pass the inheritance directly to my wife and her sister.
I understand there is a means by which this can be achieved, which does not involve her actually accepting the legacy.
If that is correct I'd appreciate the thoughts of anyone who has either done this, or who understands how it works.
Thank you.

The executors, with the agreement of the affected beneficiaries, presumably your mother-in-law, draw up a deed of variation. That then replaces the relevant parts of the will.

SailorSam

I can't see any reason she can't give something that belongs to her away. Unless of course she's on some sort of benefits and is doing so to try and bypass the system. That would be deprivation of assets.

Mattygroves2

If the MIL already has an estate that is big enough to pay IHT then she may be avoiding a gift which would be added to her estate if she dies within 7 years. If you go down the deed of variation route then the seven year clock never starts ticking.

securityguy

SailorSam wrote: »

I can't see any reason she can't give something that belongs to her away. Unless of course she's on some sort of benefits and is doing so to try and bypass the system. That would be deprivation of assets.

Inheritance Tax would be a common reason. There's the potential for it to be charged twice.

nom_de_plume

spitfire21 wrote: »

I understand there is a means by which this can be achieved, which does not involve her actually accepting the legacy.

It's called A Deed of Variation and she has 2 years from date of death to set it up. In the meantime she can still accept the legacy and just implement the change to the will and the transfer of the legacies within this time frame. She can do it herself without involving any other beneficiaries or the executor(s) so long as the change does not affect any of the others (all in my amateur understanding).

Some light reading here

Mojisola

spitfire21 wrote: »

My mother in law has just inherited a property and some money, total value around £120,000, from an aunt. She would like to pass the inheritance directly to my wife and her sister.

I understand there is a means by which this can be achieved, which does not involve her actually accepting the legacy.

If she's doing this because she has plenty of money to support herself and doesn't need the inheritance or wants to avoid inheritance tax, a deed of variation is the way to go. Very straightforward.

If she's doing it because she doesn't want the inheritance to be spent on residential care or because it would affect any means tested benefits she has coming in, it's a bad idea. She could be assessed as still having the capital and end up without the money or benefits.

nom_de_plume

nom_de_plume wrote: »

In the meantime she can still accept the legacy and just implement the change to the will and the transfer of the legacies within this time frame.

Thinking further on the above it may not be correct. Can the original beneficiary accept the legacy and then transfer it or should they refuse to accept it in the first place????

Mojisola

nom_de_plume wrote: »

Thinking further on the above it may not be correct. Can the original beneficiary accept the legacy and then transfer it or should they refuse to accept it in the first place????

As I understand it, if she accepts the legacy, it would then be hers to give away.

If she wants to change the will, it needs to be done before she accepts the money and changes the ownership of the property.

nom_de_plume

A bit more digging suggest that it's fine to accept the legacy and even change it and to then decide to transfer it with a deed of variation. There is a good example half way down this page.


"What if the property being varied has been changed?



Yes. If the asset that is subject to the deed of variation has changed, it is still possible to execute a deed of variation.
Example
Christopher was left £100,000 in his father’s Will. Not needing this money, Christopher invested the money into a life assurance investment bond. Six months later Christopher was discussing his own potential inheritance tax liability with his financial adviser. They recommended that as Christopher had no need for this money that he executes a deed of variation in relation to the £100,000. It was still possible to do this even though the £100,000 had been transferred to a life assurance investment bond."