Changing Discretionary Trust by DoV

lr1277

I am planning ahead would like to get your advice on the order of actions.

My parents wrote mirror wills in 1996 where they put all the assets into a discretionary trust.

They have since got advice that these can be changed by Deed of Variation if necessary.

Say for my dad's will, my mum, brother and I are the beneficiaries. My mum and I are the executors.

The tax laws have changed massively since 1996 and I don't think it is advisable to put assets into a trust anymore. At least not in my my parents' circumstances.

So I would like everything to be passed to my mum. I have discussed this with my dad but he sees no need to change his will.

Now assuming my brother and I can agree that mum gets everything, when should we sign the DoV?

In order to get probate, we have to pay the likely inheritance tax.

But if mum gets everything, then I don't think any IHT is payable.

So can we enact a DoV before probate is granted?

Keep_pedalling

Both really should make new wills as you say so much has changed in 35 years. You can’t do a DoV until one of them dies, so should one of you for some reason not have the mental capacity at that time you won’t be able to do it, one very good reason to make new wills.

xylophone

Below seem relevant - your father can confirm with his solicitor.




https://www.thepfs.org/news-index/articles/the-correct-use-of-deeds-of-variation/82865

The agreement of the beneficiaries 

The variation must be signed by all the people who would lose out because of the variation.  If these include children or unborn beneficiaries, then the approval of the Court will be needed - the parent’s signature on behalf of a child is not sufficient.  It would also follow that if the legacy under the will is to a discretionary trust then, unless all the beneficiaries of the trust are over 18 and ascertained, no variation will be possible without the Court’s approval. The trustees of the trust have no power to effect a variation. 

https://www.redstonewills.com/news/item/what-is-a-deed-of-variation-how-can-it-benefit-you#:~:text=A deed of variation can,years of the deceased's death.

A deed of variation can be made before or after the grant of probate is issued or even if the deceased’s estate has already been distributed. However if it is being made for inheritance or capital gains tax reasons it would need to be made within 2 years of the deceased’s death.

The other requirements are:

• All beneficiaries affected are over the age of 18 years old
• All beneficiaries affected must mutually agree to the changes
• None of the beneficiaries who adjust their share are compensated for what they lose

lr1277

Keep_pedalling said:

Both really should make new wills as you say so much has changed in 35 years. You can’t do a DoV until one of them dies, so should one of you for some reason not have the mental capacity at that time you won’t be able to do it, one very good reason to make new wills.

Whilst I agree in principle, getting Dad to change his mind is difficult. Dad is of the opinion he has done the best for his family so why should he change the will now.

Also he has a form of dementia. So some of the time he speaks cogently with a good recall of facts, at other times he can't rememer much. I am not saying it can't be done, just that it would be difficult.

Also getting a solicitor involved in the process might be hit and miss. Depends on dad's faculties at the time he is talking to the solicitor. Again could be done, but maybe difficult or require a few attempts, by which time, my dad may change his mind.

I might try once or twice in the near future, to see if anything is possible.

lr1277

Thanks xylophone. That seems to answer my question.