Deed of Variation (DoV)

cfw1994

Short TL/DR: Looking for an example DoV letter!


Full story:

My wife's mother sadly passed away just over a year ago, a couple of years after her father.
My wife and her brother and sister are the named beneficiaries. 
They were all joint executors, but her siblings signed a letter (she wrote!) to allow her to take on the executor role.
She completed that - big pile of paperwork - and filed for probate last November.

Probate was granted earlier this year, and she has now completed the task of gathering the various monies together ready for sharing out.   No mean task, given her parents had a propensity for spotting a new building society and opening a little account!

The estate has no IHT to pay: the numbers, including house sale, all fall below the thresholds.


Fast forward and all three of them are keen for the grandchildren to take a portion of the funds directly.
An easy decision since they each have 2 children, and all three are absolutely clear and happy about this - there will be no future issues as a result of this.

As I type that last line, I am reminded of that fine Paul Gascoigne quote: "I never predict anything, and I never will" 🤪    .....but seriously, the siblings all get along famously, have worked to clear the house (now SSTC), and it will just be them 'formalising' things 👍


To be clear: the change will make no difference to IHT or CGT - there is none payable on the estate.

Following https://www.gov.uk/alter-a-will-after-a-death, the "Instrument of Variation checklist" makes it pretty clear all they need to do is write a letter, duly witnessed, to declare the change, and signed by all three of them.  

As the form states: "It does not have to be by formal Deed; you can use a letter or other document."

We can see the notes suggesting it should have a statement such as “The parties to this variation intend that the provisions of section 142(1) Inheritance Tax Act 1984 and section 62(6) Taxation of Chargeable Gains Act 1992 shall apply”.

Does anyone have a simple letter that can be used?

It feels daft to spend even £49 on a template when she has done all the legwork to get to this point without any issue.

If we don't find one, we will write the letter.....but if anyone is happy to share even a mildly redacted version, either here or in a direct message, it would be greatly appreciated!

Thanks for reading.

The_Unready

Is there any reason why the original beneficiaries can't just gift the money to their children? That sounds a lot easier....

cfw1994

Just that the amount would result in tax payable should one of the siblings pass within 7 years.  Potentially Exempt Transfer….

Makes perfect sense to document the sharing by a DoV & remove that issue completely.

FWIW (nothing, legally!), all siblings know their mum intended for the grandchildren to have a ‘small 5-figure sum’ each….but never documented it in a will.  Enacting this is the goal of the DoV 👍

tetrarch

I was researching this exact topic last week

Away from all the paid versions I found this:

https://www.accountingweb.co.uk/any-answers/can-i-draw-up-a-simple-deed-of-variation-myself

I've not done anything with it yet as the estate is not yet formalised, but this looks OK. The only outstanding questin I have is as to the required witness(es).

Regards

Tet

cfw1994

thanks @tetrarch, that looks pretty well what we need….a great starting point for us 👍

Keep_pedalling

cfw1994 said:

Just that the amount would result in tax payable should one of the siblings pass within 7 years.  Potentially Exempt Transfer….

Makes perfect sense to document the sharing by a DoV & remove that issue completely.

FWIW (nothing, legally!), all siblings know their mum intended for the grandchildren to have a ‘small 5-figure sum’ each….but never documented it in a will.  Enacting this is the goal of the DoV 👍

Only if your own estate is in IHT territory, tax is not payable by the receiver of the gifts.

If IHT is an issue for any of you then the effected beneficiaries should make a deed of variation individually, this is not something you all need to agree on.

cfw1994

Keep_pedalling said:

cfw1994 said:

Just that the amount would result in tax payable should one of the siblings pass within 7 years.  Potentially Exempt Transfer….

Makes perfect sense to document the sharing by a DoV & remove that issue completely.

FWIW (nothing, legally!), all siblings know their mum intended for the grandchildren to have a ‘small 5-figure sum’ each….but never documented it in a will.  Enacting this is the goal of the DoV 👍

Only if your own estate is in IHT territory, tax is not payable by the receiver of the gifts.

If IHT is an issue for any of you then the effected beneficiaries should make a deed of variation individually, this is not something you all need to agree on.

Sure....but the siblings *are* all into IHT territory.....and they *do* all agree on this!
Letter is written, thanks all