Simple one (I think!) around Deed of Variation

ferger

My Dad died leaving a will. He was in the process of drafting a new one when he died, which differed only in that it made some specific bequests that were absent in the original.

My sister and I are residual beneficiaries of the valid will, but would like to acknowledge his intentions, which have no bearing on IHT on the estate. I figure we should do this via Deed of Variation, as just making a payment to the new beneficiaries from our own inheritance (his cleaner and our children) might introduce PET issues should one of us die rather sooner than we'd hope. So, I am assuming that this is something we can do when I get to the point of distributing the estate as no bearing on HMRC's perspective - but, I am not clear on where the Deed is lodged / recorded. Can I just lodge it with the final estate accounts? Or does some power that be need to acknowledge it prior to that?

Mattygroves2

If one of the specified beneficiaries is under 18 you can't do a Deed of Variation. If that doesn't apply then you'll need the agreement of all the beneficiaries (not just the residual ones) and a properly drawn up Deed so go and see a solicitor. You could DIY but it is too important a document to not invest a few hundred £s in getting it done properly.

Far easier to simply make the gifts yourselves. The PET rules only come into play if your estate is likely to be over the IHT limit and you don't survive 7 years. Also you've got a £3,000 gift allowance for this year each and £3,000 for last year as well.

Mojisola

ferger wrote: »

My Dad died leaving a will. He was in the process of drafting a new one when he died, which differed only in that it made some specific bequests that were absent in the original.

My sister and I are residual beneficiaries of the valid will, but would like to acknowledge his intentions, which have no bearing on IHT on the estate. I figure we should do this via Deed of Variation, as just making a payment to the new beneficiaries from our own inheritance (his cleaner and our children) might introduce PET issues should one of us die rather sooner than we'd hope.

Mattygroves2 wrote: »

If one of the specified beneficiaries is under 18 you can't do a Deed of Variation.

It doesn't matter if the new recipients are under 18 - only if the beneficiaries whose legacies would be affected.

If that doesn't apply then you'll need the agreement of all the beneficiaries (not just the residual ones) and a properly drawn up Deed so go and see a solicitor.

You only need the agreement of the beneficiaries affected by the proposed changes - in this case, the OP and sister.

You could DIY but it is too important a document to not invest a few hundred £s in getting it done properly.

Far easier to simply make the gifts yourselves. The PET rules only come into play if your estate is likely to be over the IHT limit and you don't survive 7 years. Also you've got a £3,000 gift allowance for this year each and £3,000 for last year as well.

This does seem to be the simplest way of handling this situation unless the amounts involved are very high.

getmore4less

How old are your kids?

It may not even need PET gifts for their money.

getmore4less

HMRC have a reasonable page on DOV and making sure they are valid for tax purposes

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373615/IOV2.pdf

ferger

My estate would be over IHT limit. And the sums involved are high enough for PETs to come into play ie >£10k for each of my children and £5k total to his cleaner (who was more a carer and deserves every penny). But I'm not planning on dying any time soon, so not sure I'm not prepared to take the risk of an unlikely and diminishing approx £10k tax bill over spending a few hundred quid with a solicitor. It strikes me that it's a very simple variation - is a solicitor really needed?

getmore4less

Its £10k extra tax for 7 years all or nothing.

ferger

My children are both < 16. But 10k would likely give rise to income of more than £100 ie taxed as me

ferger

getmore4less wrote: »

Its £10k extra tax for 7 years all or nothing.

Taper relief?

getmore4less

ferger wrote: »

Taper relief?

not on PETs of 25k. Needs to be over 325k

getmore4less

Check the cost of a 10k life insurance policy for 7 years if really bothered about it.