Deed of variation and trusts?

Jet

I am sole executor to my late relatives estate and residual beneficiary.  The solicitor is asking me if I would like to do a deed of variation.  The only person I would want to do this for is to benefit my son.  However, he is early 20's, still at home and possibly a bit immature, and I feel cautious about handing him a significant sum and would feel more comfortable doing this when he is a bit older.

I realise if I do a deed of variation and then I die within 7 years, this would save my estate paying the inheritance tax on whatever I choose to change in my late relative's will, but is there any other advantage to doing this?

Also, is it possible to do a deed of variation with a trust?

Thanks.

xylophone

It would be possible to vary the will to create a Trust but  if this were to be a bare trust, as your son is over 18 he would have the absolute right to call for immediate access to (and control of) the trust assets. 

If a Discretionary Trust, there are  administrative and taxation matters which  would need to be addressed.

You would need advice from a solicitor experienced in wills and trusts.

You do have two years from the date of death to consider a variation of the will.

Jet

Thank you. It is 18 months after his death and I have only just got probate, so I only have 6 months to do this.
I will do some researching of discretionary trusts.

xylophone

https://www.gov.uk/trusts-taxes

Keep_pedalling

With the inheritance would your estate actually be in IHT territory? 

getmore4less

A key is what IHT are you potentially going to save with a DOV now to give that 7 year window.

Any spouse or spouse transferable nil rate band to consider that could mitigate some or all of any potential IHT that gives upto £650k worth of protection.

if you have property that can protect up to another £350k

Jet

Keep_pedalling said:

With the inheritance would your estate actually be in IHT territory? 

Yes, it would.

Marcon

Jet said:

Keep_pedalling said:

With the inheritance would your estate actually be in IHT territory? 

Yes, it would.

In that case your son will inherit a decent amount anyway, particularly if there is a property involved and he'll get the allowance for that on top of the usual £325K nil rate band.

Sometimes there are more important things life than trying to avoid tax. If you set up a discretionary trust, how thrilled will your son be when he realises what you've done and why? Even if you don't tell him immediately, he'll find out at some point.

heraldthewake

Can a Deed of Variation be altered once it has been signed and filed with the solicitor handling probate?

Malthusian

heraldthewake said:

Can a Deed of Variation be altered once it has been signed and filed with the solicitor handling probate?

No reason why not as long as all affected beneficiaries agree and you're still within the two year limit. The solicitor will probably charge extra if it requires more work.

If there's a follow-up question it would be better to start a new thread.

getmore4less

heraldthewake said:

Can a Deed of Variation be altered once it has been signed and filed with the solicitor handling probate?

Is it still just a piece of paper or has it been acted on in any way.

Once an asset has been redirected it cannot be undone.