Deed of Variation

lizzy0503

My father sadly passed away at the beginning of the year and left everything to my mother. We have only recently got grant of probate and my brother, who is executor, is now looking at dealing with the will. My mother has now said she doesn’t want any of my fathers money and wants us 3 adult children to have it. The amount involved doesn’t attract any Inheritance Tax but I have two questions if anyone is able to help. 

1. Do we simply write a letter of deed of variation splitting the money he left her 3 ways, she sign it and get it witnessed and then just keep copies safe (they don’t need to be sent anywhere?).

2. Some of his money is in a joint account with her. My understanding is a joint account reverts to the other account holder when one of them dies, but can she include his half of the total in the variation? 

Many thanks in advance for any advice. 

tacpot12

I can answer question 2: You are correct that the contents of joint accounts reverts to the ownership of the other account holder, so these monies are not included in the estate and cannot be moved into the estate. She can give the money anyway if she wants to, but she cannot avoid the potential inheritance tax liability of doing so. 

lizzy0503

Thank you, my concern with her giving some of that money away herself would be if she ever needed to go into care (she’s 85 and registered blind) could they say she’d given her money away to avoid paying for her care and demand it back. That’s why I wondered if half of what’s in that joint account could be deemed to be from my father and still leave her in excess of £30,000. There would be no inheritance tax due on the amounts involved anyway, and they are in rented accommodation so no house involved.  

SevenOfNine

Be sure her circumstances won't mean she might fall foul of this later on https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

We used a STEP registered solicitor for our DoV so we could discuss all the implication of diverting a £100k inheritance to our grandsons.  Her advice on our first meeting was to wait 12 months (DoV has 2 year time limit from date of death to be completed) to be absolutely sure we were doing the right thing (which I ignored). 

There is some terminology required for the DoV & if you haven't already found the government guidelines, it's here https://www.gov.uk/alter-a-will-after-a-death

Keep_pedalling

A deed of variation does not avoid deliberate deprivation of assets and is only really useful in avoiding the legacy adding to your estate for IHT purposes which does not apply in this case. To be frank she should not do this and you should discourage her from doing it. she may live another 10-15 years in which time those savings may be needing for things other than care.

Marcon

lizzy0503 said:

Thank you, my concern with her giving some of that money away herself would be if she ever needed to go into care (she’s 85 and registered blind) could they say she’d given her money away to avoid paying for her care and demand it back. That’s why I wondered if half of what’s in that joint account could be deemed to be from my father and still leave her in excess of £30,000.  

No; as others have pointed out, if it's a joint account, the money is already hers. Given her age and the fact she is registered blind, the local authority would certainly be on the alert for her disposing of any assets. They wouldn't 'demand money back'; they simply wouldn't fund her care in the first place.

lizzy0503

Thank you everyone for their responses. This is something my mother is very keen to do and she is determined she won’t ever go into a home (famous last words I know!). So, a final question. If she did a deed of variation for what my father left her from his sole bank account to be split 3 ways between myself and my siblings which is approx £50K total but kept everything in the joint account, which is in excess of £60k and therefore above the threshold to be eligible for funded care would it still be likely to be seen as deprivation of assets? From my understanding the £50k would go straight to the executor to be distributed and never form part of her assets. Her income is far in excess of her outgoings, she lives in rented accommodation that is owned by my brother so will never be sold or rent increased so she will never need the money she wants us to have from my father. I understand what people have said about a deed of variation usually being used to decrease Inheritance Tax etc. but am at a loss what else to do to ensure my mother gets what she wants regarding my fathers money. 

thegreenone

If your father left everything to your mother, the 50k in his bank account would go to your mother unless his Will states otherwise.

lizzy0503

thegreenone said:

If your father left everything to your mother, the 50k in his bank account would go to your mother unless his Will states otherwise.

My mother wants a deed of variation to the will to split that 50k between her 3 children. 

Keep_pedalling

lizzy0503 said:

thegreenone said:

If your father left everything to your mother, the 50k in his bank account would go to your mother unless his Will states otherwise.

My mother wants a deed of variation to the will to split that 50k between her 3 children. 

Why? Although it is is stupid thing for her to do, in this case a DoV offers no advantages over making simple gifts.

lizzy0503

Perhaps she would be better seeking legal advice over what her best options are. When she told us originally she didn’t want my dads money we told her it was too late, she would potentially be penalised down the line for giving her money to us. When we heard about the deed of variation our understanding was she would be refusing my dads money so it would transfer direct to us and never be part of her assets, so she couldn’t be accused of deprivation of assets, however it seems our understanding of this is incorrect. To be clear, we’re not talking about reducing her savings so any care would be paid for by the local authority, she would still have in excess of £60k in her own name. Her and my dad worked hard to leave their children something after they were gone and she just wants to ensure we get something, and to her mind she doesn’t need that money that is still currently sitting in my dads sole account.