Deed of Variation

Sine_Nomine

Looking for some advice regarding a DoV.  

It's a straightforward case where one of two equal beneficiaries want his inheritance to bypass him and go directly to his own two children (the deceased's grandchildren).  IIUC the other beneficiary does not need to be involved in any way as her position is not affected by the DoV?

I've seen it suggested that there can only ever be one DoV to a will.  Does that mean the other beneficiary is therefore subsequently locked out from also doing the same and passing part or the whole of her share to her daughter?

Everything I've read suggests there is no specific wording for the DoV, just that it has to be in writing and agreed to by any beneficiary who's position is worsened by the DoV.  

Can anyone point me at some template formats for a DoV.

And one final question - As there is no impact on IHT I understand HMRC do not need to be notified of the DoV.  So what has to be done with the DoV, does it just need to be kept by those involved, or does a copy have to be sent to HMCTS to be associated with the will itself?  

Sea_Shell

DoV's are more about YOUR* estate than that of the deceased.     

As far as i know, each beneficiary of a will has the right to DoV their inheritance, separately to each of the others, so I can't see how there can only ever be a "one only" rule, but maybe YOU can only ever do one.    Not one now, and another in a few weeks time IYSWIM.

Also I don't believe it is an "all or nothing" decision. you can DoV a portion, and keep some.

As for where to keep it.   Safe with YOUR papers, as it will be your executors in the future that will need the document, to show that this money was never part of YOUR estate.     If IHT was due on the deceased's estate, this would still be payable, before distribution, unless the DoV was to Charity (i think?)

Sorry I don't have any templates.


*when i say YOUR, i mean that of the beneficiary

JGB1955

I've used a deed of variation to divert 2/3 of my inheritance from my father, directly to my adult children.  Whilst I can't make a second variation there is nothing to prevent my brother (the other beneficiary) from signing his own deed.  I have no idea if he plans on doing so, and there is no need for him to let me know.
I found it impossible to find a template, so just drew up a letter which conformed with Change a will after a death - GOV.UK (www.gov.uk).  It's not witnessed - just signed and dated. There was no need to send it anywhere as it made no difference to the IHT due.  I've kept the letter with all the other paperwork (I was executor).  I don't suppose it will ever see the light of day again!

The wording I used was:

DEED OF VARIATION

 By way of variation of my inheritance from XXXXXXX who died on DD/MM/YYYY  I instruct the executors to pay

·       £XXXXXX  out of my entitlement to my son, (name)  of (address)  and

·       £XXXXXX  to my daughter, (name)  of  (address)

 It is intended that the provisions of section 142(1) Inheritance Tax Act 1984 shall apply to this variation.

 Signed  ………………………………………………………

(full name)

 Dated dd//mm/yyyy

 

Sea_Shell

JGB1955 said:

  I've kept the letter with all the other paperwork (I was executor).  I don't suppose it will ever see the light of day again!

Shouldn't this now be kept with your paperwork?   Won't it be your executors that will need it in the future?

JGB1955

Sea_Shell said:

JGB1955 said:

  I've kept the letter with all the other paperwork (I was executor).  I don't suppose it will ever see the light of day again!

Shouldn't this now be kept with your paperwork?   Won't it be your executors that will need it in the future?

Yes, - you're right.  The paperwork from my father's estate is in our safe, alongside our wills, so my executors won't have a problem finding it (and they know about the deed already, since they were the ones that have benefitted from it).

Keep_pedalling

A DoV should be witnessed.

https://www.ommlaw.co.uk/deed-of-variation-how-to-change-a-will-after-a-death/

Template.

http://www.daviessolicitors.co.uk/forms_davies/Estate%20Planning%20&%20Trusts/Deed%20of%20Variation%20(Basic).pdf

SevenOfNine

We did a DoV 4 years ago, or rather a STEP solicitor did it for us so we could discuss & be confident about any/all implications. Considered the few hundred pounds it cost to be a drop in the ocean of the £100K being diverted to our grandsons. It must be done within 2 years of date of death.

There are a couple of provisions that it had to contain, I'll look at it later but I think JGB1955 last para covers it. Signatures were witnessed. Paperwork didn''t have to be registered anywhere & is with our wills. 

We are trustees of the money (minors) & the parents are aware.

photodgm

It could be helpful for beneficiaries of the DoV to have a copy, as it may help later if they have to go through anti money laundering checks, for example for a house purchase. 

getmore4less

To be effective for tax(IHT and CGT) there needs to be specific wording.

use the IOV checklist
https://www.gov.uk/government/publications/inheritance-tax-instrument-of-variation-checklist-iov2

If your own estate won't be in IHT territory with the inheritance(or you are happy to take the 7year risk)  then gifting is an option.

Sine_Nomine

Thanks to all for the replies.  That's so helpful. 

I hadn't clocked that it would need witnessing.  Good steer.

The suggestion of giving copies to the new beneficiaries is a good idea as that is exactly where the money is likely to end up, being used to fund a house purchase, and I am aware mortgage lenders are very hot on wanting to see documentary proof of the source of any money.

Getmore4less, based on age and health the 7-year-risk is relatively low, but the beneficiary making the DoV will definitely end up in IHT territory, so this simple piece of paper could potentially save £80k of IHT in this case.  Seems a no brainer to me.    

JGB1955

Sine_Nomine said:

I hadn't clocked that it would need witnessing.  Good steer.

  

The government website doesn't mention witnessing of signatures on a DOV.  Probably a good idea though..... even if it's just the witness to the  'letter' that's totally acceptable.