Can you change a deed of variation

JillyOJolly

Evening All,
My OH Step FIL died a year ago in April, 2012. He changed my OH mothers will with a deed of variation (without telling anyone) a year after she died) 9 years ago to avoid inheritance tax creating a discretionary trust in her name. He also changed his will on the same day so his own 3 children got a significantly higher percentage of his estate rather than the original equal share between 5.

Probate was granted very quickly and whilst my OH and his brother were very sad that the will was not going to be split equally anymore,they did not contest it, but let it go as his last wishes and just waited it out. One of the other children getting the higher percentage certainly made it clear "it is what it is, it was his intentions, get over it". Probate was cleared (many, many months ago now) and the statement of accounts came out for signing for all 5 children before distribution of funds. In those statements it clearly showed the loan back to OH mothers discretionary trust of which my OH and his brother are the only beneficiaries. Three of the children have signed and two are now disputing the deed of variation done and the loan back to the trust stating they should have a claim to it and it should go to all 5 equally and that the original paperwork completion is now negligent.

I have read that the only people who can change a deed of variation are the beneficiaries and wondered if I am correct? Therefore this one child asking for all children to join him in taking the case to court to challenge to validity of the deed of variation to have it changed is simply to get my OH and his brother on board? Can this be done without them 10 months post probate being completed? Do they have any rights to the discretionary trust which I understood to be only biological children or their biological children etc etc? All original paperwork is very clear and the person now contesting this is actually the executor who pushed for immediate probate!

Any advice would be much appreciated and I thank you in advance. This is causing so much grief. THis is not about money and before my OH ends up embroiled in spending money he really should not have to or in a legal bind he does not deserve to be in I really dont know where to start.

NOne of the original estate is being paid out at this point due to the others not signing and it makes a mockery at this still sad time that someones wishes are not being adhered to due to pure greed.

dzug1

If it's not about money move on and forget it

If it is about money then expect a murky legal battle - I doubt if you can pursue it without proper legal help

JillyOJolly

of course its about money!

Savvy_Sue

A deed of variation doesn't need ALL the beneficiaries to agree, only those who are disadvantaged by it.

However I've been unable to follow the scenario you describe: you might need to post the wording of the will(s) and the DofV before it makes sense. Equally it could just be me!

madbadrob

Let me get this right. The dispute is about the money being repaid to the trust that was set up. At the time the trust was set up the money in the trust was to be split equally 5 ways and that two people are saying this money in the trust should be split equally 5 ways?

If I have it right why is everyone complaining because this was what the mother wanted at the time of her death and the FIL changed it to avoid IHT. I would say that the correct decision would be to apply the earlier will so that the money in that trust plus any interest should be split 5 ways.

That all said I am not a lawyer, have never come across this before and would therefore suggest obtaining legal advice.

Rob

purple_haze

Before the transferable nil rate band for inheritance tax was introduced, it was commonplace to put these arrangements in place by way of deed of variation where one spouse died leaving their entire estate to the surviving spouse.


Briefly, the surviving spouse via the deed of variation would redirect the deceased spouse's estate (up to the value of the nil rate band for inheritance tax) to a discretionary trust of which the surviving spouse and the children were discretionary beneficiaries. However, the executors of the deceased spouse, instead of placing the deceased spouse's estate in the discretionary trust, would decide to place an IOU from the surviving spouse in the trust. The IOU would be to the value of the deceased spouse's estate.


In this way, all the deceased spouse's assets, including their share of the family home, went to the surviving spouse. However, on the death of the surviving spouse, the amount of the IOU, being a debt, would be deducted from the value of the surviving spouse's estate when inheritance tax came to be calculated.


It appears this happened here. Because the children of the first spouse to die were beneficiaries of the discretionary trust and the step-children weren't, the surviving spouse to achieve equality between all the children changed his will to benefit his own children.


We haven't been told who the trustees of the discretionary trust are (they would almost certainly have been appointed in the deed of variation), but they now need to take action to call in the IOU from the surviving spouse's estate, just as any creditor of the estate would. It matters not at all whether the executors or the children have signed the estate account.


If somebody believes the deed of variation was in some way defective, they should put forward their reasons. However, the trustees of the discretionary trust should demand payment from the executors of the surviving spouse's estate and if payment is not forthcoming, they should sue the estate.


The trustees should find no shortage of solicitors willing to act for them on a no win/no fee basis. If the trustees refuse to call in the IOU, the beneficiaries should take action to have them removed.

JillyOJolly

Thank you purple haze, thats exactly it. My OH and his brother were named as the only beneficiaries of the discretionary trust of their mothers by the FIL when he re-wrote his own will making his children receive a higher portion of his estate. This makes me believe he was of very sound mind to make this choice, especially as he changed their pencentage to a higher rate in his own will on the same day!

My OH and his brother were contacted soon after FILs passing to ask if they knew of any other living or deceased children or their children, of which there are none.

2 of the 3 step children (one is not bothered either way) want the trust money as well as the higher portion of their fathers money as well. Its disgusting. They want OH and brother to agree to giving up a substantial amount of the trust money to give to them by agreeing that the lawyers who set up the trust for the FIL was negligent in allowing the FIL to only listing OH and his brother as beneficiaries and wants them to agree to change the deed of variation, simple and easily apparently! Oh and get compensation for doing so?!

I want them both to run a mile. They have lost their father, their mother and now their FIL and have each other and now a step family grabbing for money like that. Its pitiful.

I am still trawling for test cases here. Not trying save a buck per se. I know probate law etc is so expensive. However, probate was completed months ago. I thought probate meant that a court had decided the will was declared valid. The estate HAS to pay back the debt to the trust. This man is the executor of the will, he has to do this, surely? he is threatening to carry this on for another year to prove negligence. He is suggesting a court will find in his favour and will be allowed to do a Deed of Rectification to the Trust to allow all 5 beneficiaries.

How do people sleep at night!

nom_de_plume

I'm struggling to get my head around this without numbers attached to it. Perhaps, without giving the actual sums involved, you can describe by percentages what each is to get in either scenario? Also is their any other background such as an unequal financial situation when the parents married?

JillyOJolly

both wills originally written, left everything to each other and if they went together left equally amongst 5 children.

OH mother went first in 2005. FIL did a deed of variation putting £140k into a discretionary trust in her name with OH and his brother listed as beneficiaries. He also changed his own will giving OH and his brother 11% each and his own children 26% each. He advised only his son he had done this and both documents are signed on the same day. the same son who is now contesting this. The paperwork is very clear why he did this to make it fair.

FIL passed April 2012. Probate was granted very quickly and it was soon obvious that the will had been changed and the deed of variation was in place. House was sold. The accounts were sent for signing and it was only then son and 1 other child then noticed that the discretionary trust was a debt to the estate and not part of it. They had PRESUMED they were entitled to this. Wrongly, of course. They have refused to sign off the estate accounts and no money is currently changing hands.

I cannot remember the exact figure of FIL estate, but I think the estimate of the difference was only about £9K in OH and brother favour. If they win this change to get 26% of the trust each as well this will leave them more in favour of the whole estate. Only 2 of the 5 are in favour of this, and 2 of the not in favour are the only current beneficiaries.

as probate has long passed is it appropriate to see advice from a probate lawyer?

Gosh I appreciate any help here, sorry its so in depth. He is booking formal advice, but its always good to find someone who may be in the know, has been through or may just be able to keep me smiling

madbadrob

Ok using your figures your hubby and his brother are entitled to 70k each plus 11% of your FIL estate. The other brothers are entitled to 26% of FIL estate. I am guessing that this was done to account for the money in the trust and that at the time of writing the will this would balance out the bequests but didnt take into account the increase in property value etc this meaning your hubby and his brother now receive a larger amount.

I doubt that the DOV can be changed now and that this will be the final pay out. May I suggest that this is no longer something we can offer you valuable advice on and you obtain legal advice because at the end of the day if the two step siblings wont sign then court is where it will end

Rob

JillyOJolly

Thanks Rob, Much appreciated.

Such long drawn out expensive processes and disrespectful of peoples wishes. It was ok when they thought they were getting the lions share!

Fingers crossed. These are not particularly life changing sums of money in todays markets!

JOJ