Avoid IHT by Deed of Variation?

Yorkshireman99

eddyinfreehold wrote: »

I agree with Red Squirrel here ... the bottom line is that all taxation spreads the cost of running society across the tax paying population. What percentage is taxed and what that tax is spent on is where politics steps in. There is the famous Jean-Baptiste Colbert quote, "the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."


So eddyinfreehold, how did you reduce the IHT from 6 figures to 5 figures???

....Hoploz, it's complicated but bear with me.

Firstly the will was simple and the three executors were also the three beneficiaries and were empowered to dispose of the Estate as they jointly felt fit. A proportion of the IHT due was donated to either charities or CASCs of significance to the Executors. This doesn't mean the beneficiaries got any/much more, it's just that the IHT was reduced. The Charities and CASCs were able of course to reclaim Gift Aid at 25% as well. It's a bit like paying the tax but choosing how it is spent.


Secondly there was a major discrepancy when it came to sorting out the transferrable allowance of the deceased's spouse. Basically one of my parents had died about 50 years before the other in the days of Estate Duty. The surviving parent never remarried. When we called in all the wills and death certificates etc it transpired there was a major difference between the Probate Value on the first death and the actual estate value of the same because of a declared and inherited right to a share of a Trust on the death of the first parent's mother..........are you still with me? ......As the first death predeceased her mother and the Trust was exhausted when the time came, the first death never benefitted in spite of declaring it in Probate. We were able to have the 50 year old Probate reassessed and the Transferrable Allowance corrected. Does this make sense? It's a case that will almost never occur again I would think. It's also a good argument for keeping hold of important documents like solicitors correspondence and estate accounts for a very long time.

Very interesting but unlikely to assist the OP whose status regarding the will he is enquiring about is not clear. Ultimately it is the executor who needs to deal with it and ask the beneficiaries if they want to do DOVs to prevent payment and tthen repayment of IHT. By the way you say the executors could dispose of the estate as they felt fit. Executors have no such discretionary power. The must distrute the estate strictly according to the terms of the will subject of course to any DOVs though strictly those take effect afterwards.

eddyinfreehold

I agree it's unlikely to help the OP unless Charitable or CASC giving is an option; the the OP did ask after all.

There was no discretionary power, the will specifically stated that the Executors should agree and then dispose of any or all of the Estate as they jointly felt fit, then have equal shares of any residue.

Red-Squirrel_2

Yorkshireman99 wrote: »

Read the OP's original post. It does not even say that they are a beneficary so what right have you to judge them in this way? The purpose of this forum is to help people not to make snide remarks.

Everybody wants good public services, nobody seems to want to pay tax!

I think its perfectly reasonable to remind people of what taxes are actually for and that it isn't just the government confiscating money to annoy them!

euronorris

Keep_pedalling wrote: »

I think the OP was referring to the testator rather than the beneficiaries, although most estates hitting the IHT threshold do so because of house price inflation and or inheritances they received rather than the acquisition of large assets through work.

As far as the benificiaries are concerned it is an unearned windfall, so they hardly have room for complaint. My better half was the residuary beneficiary to her uncles estate, and the considerable IHT bill came out of her share, so we have been on the receiving end of an IHT hit, but have no problem with that.

If you want to do something about your own estate, then the solution is simple, be very generous to your family, freinds, charities and yourself while you have the chance don!!!8217;t leave it to your dotage.

He specifically said 'what we've worked for' though, which is where my comment came from. It's an odd comment to make with regards to an inheritance.


Agree with the rest of what you've said.


And it's not just people misinterpreting rules thanks to media coverage, and lack of full knowledge. Some 'experts' can give incorrect information. Like a solicitor near us who has told his client that he can carry over the IHT allowance from both his first and second wife (both deceased) to give a max total of over 100%. He can't, and no amount of reference to the legislation and HMRC guides will convince him otherwise. The solicitor is telling him what he wants to hear, and that's that.

Hoploz

When I said ....

Hoploz wrote: »

One thing I do know is that all of us dealing with this will be getting advice regarding our own affairs to try and ensure our children and grandchildren get as much as possible of what we've worked for in the future.

.... I was referring to my own estate when I die. Which I will have worked for. And still am. And the vast majority of which has been earned and is not due to house price inflation.

For the record I am one of the executors. There are quite a few named beneficiaries so the greatest share will be the £300k+ due to the government. None of us will be in receipt of a life changing sum.

I think I will investigate the charity suggestion, as although a donation would reduce the amount the beneficiaries would receive, we might all agree with putting it towards to a specific cause. Don't worry there will still be plenty put back in to the tax system.

Between this and another recent death in the family we have had a wake-up call. As one reply already said, we've realised it is important to put your affairs in order otherwise after you die what seemed all very fair and straightforward when signing up for a simple off-the-peg will may not happen the way you actually wanted. (The other case resulted in a nightmare of paperwork and achieved the heirs receiving nothing at all in practice which was not the intention of the person who died.)

getmore4less

To pick up the most don't pay IHT point.

IHT is considered a voluntary tax as for most it is possible to eliminate or mitigate to low levels with some planning.

Around 1/2 million die every year, around 15k pay IHT.

Will add more detail later in the week.