Deed of variation after one half of married couple passes. Large estate £3 m

Bolt1234

Just so that I am clear.  My husband has a life limiting illness and will pass within the next 2-3 years.  In 2027 his pension I know becomes part of his estate.  We have mirror wills and will be inheirting everything from each other  We are joint tenants btw.

Our combined estate is nearly £3m including the house which is worth approx £1.4m and his pension (approx £950k)  which is largely unspent bar he has taken the 25% lump sum and so have I from my own pension.  I am still working earning £35k (part time) plus I have my pension from my old company which is net £2k per month (Final Salary Pension).  I am also eligble for the state pension next year but am likely to defer it.

When he sadly passes I would like to pass over approx £500k (maybe more) to our two grown up children.  Do I need to do a deed of variation on his will within 2 years or can I just gift them the money and of course hope that I will live 7 more years?  That way the inheirtance tax allowances are left untouched.  
 
I come from a line of long livers in my family and am in mid 60's in good health.  

Could someone please guide me 

kipsterno1

I feel for you this can not be an easy situation but it is good that you are thinking ahead and being practical. With sums like that would it be worth revisiting your wills via a solicitor? There maybe more efficient ways of distributing your assets.

QrizB

Bolt1234 said:

Our combined estate is nearly £3m including the house which is worth approx £1.4m and his pension (approx £950k)  which is largely unspent bar he has taken the 25% lump sum and so have I from my own pension. 

How old is your husband?

If he's under 75 when he passes, you'll inherit his pension tax-free. Over, and it'll be treated as your income when you draw it.

Keep_pedalling

A deed of variation is the wrong thing to do here because £500k inherited by a spouse is subject to spousal exemption and uses none of the NRB up, but if you do a DoV all of the NR`b would be used and IHT would be payable.

Far better to simply gift the money to them. In fact I would, if enough liquid assets are available, make the gift now to start the seven year clock early.

Bolt1234

Keep - I knew you would know.  Husband is early 60's btw.  I have already given a large deposit for one son's house purchase. Other son is not ready to buy a house but will keep a careful eye on the budget in Nov for lifetime gift changes.  

Smudgeismydog

Even though your other son is not yet ready to buy a property, could you make an equivalent gift now for him to have the funds and you can start the 7 year clock?