Executor receives Deed of Variation from beneficiary: what to do?

Dodge1664

Hi,

Just wondering if anyone has found any official guidelines on what the Executor is supposed to do in this case. The beneficiary wishes his entitlement to be passed directly to someone else. One option would be to ask a solicitor, and deduct the legal fees from the beneficiary's entitlement. Any other suggestions? What anti-fraud checks are required?

thanks

Keep_pedalling

No need to take legal advice, either pass bequest to the new beneficiary as per the DoV or give it to the original beneficiary to pass on themselves. The original DoV needs to be kept by the original beneficiary not the executor. 

HappyHarry

You could just pay the legacy to the beneficiary in the will and they can pay it to their chosen appointee. 

The fact it has gone through the beneficiaries bank account does not mean the beneficiary has ever “owned” the legacy.

tetrarch

Keep_pedalling said:

No need to take legal advice, either pass bequest to the new beneficiary as per the DoV or give it to the original beneficiary to pass on themselves. The original DoV needs to be kept by the original beneficiary not the executor. 

IANAL but that doesn't sound right. The DoV changes the will and therefore changes the Executor's actions

As the "old" beneficiary I would not want those monies washed through my account

Copies of the DoV should be held by the affected parties, in the case you describe the Executor, the old beneficiary and the new beneficiary

Regards

Tet

PS I recall that the rules are different if the new beneficiary is a minor

PPS A DoV can be considered as Deprivation of Assets if that is the intention

Keep_pedalling

tetrarch said:

Keep_pedalling said:

No need to take legal advice, either pass bequest to the new beneficiary as per the DoV or give it to the original beneficiary to pass on themselves. The original DoV needs to be kept by the original beneficiary not the executor. 

IANAL but that doesn't sound right. The DoV changes the will and therefore changes the Executor's actions

As the "old" beneficiary I would not want those monies washed through my account

Copies of the DoV should be held by the affected parties, in the case you describe the Executor, the old beneficiary and the new beneficiary

Regards

Tet

PS I recall that the rules are different if the new beneficiary is a minor

PPS A DoV can be considered as Deprivation of Assets if that is the intention

A deed of variation can be made within 2 years of death and really has nothing to do with the executor. In many cases a DoV is made after the estate has been wound up. The importance of the DoV is to take the inheritance out of the original beneficiaries estate, so that document needs to be held for 7 years where the executor of the original beneficiary’s estate can find it (preferable held with that beneficiary’s will)

Unlike the will the DoV never becomes a public document and HMRC will not be aware that it exists, but it may be needed if the author of the DoV dies within 7 years. 

Dodge1664

thanks for the replies. I think the Executor might have concerns that if he just pays out the money to the new beneficiaries as per the DoV, then there might be trouble if the old beneficiary then complains that he hasn't received his money. The Executor has met the benficiaries but doesn't know them personally. The old beneficiary would prefer to avoid the money appearing on his account so that its clear that its not part of his own estate.

Notepad_Phil

Dodge1664 said:

thanks for the replies. I think the Executor might have concerns that if he just pays out the money to the new beneficiaries as per the DoV, then there might be trouble if the old beneficiary then complains that he hasn't received his money. The Executor has met the benficiaries but doesn't know them personally. The old beneficiary would prefer to avoid the money appearing on his account so that its clear that its not part of his own estate.

Yes I can understand that the old beneficiary might prefer that, but in the these circumstances then the executor is perfectly entitled to follow the will and pass the money to the old beneficiary and let them pass the money on. The DOV makes it clear that its not part of his estate so there's no issues - unless they were trying to hide the money as they're on benefits that would be reduced if they had money, in which case the executor certainly wouldn't want to be involved in assisting such actions.

Sea_Shell

Notepad_Phil said:

Dodge1664 said:

thanks for the replies. I think the Executor might have concerns that if he just pays out the money to the new beneficiaries as per the DoV, then there might be trouble if the old beneficiary then complains that he hasn't received his money. The Executor has met the benficiaries but doesn't know them personally. The old beneficiary would prefer to avoid the money appearing on his account so that its clear that its not part of his own estate.

Yes I can understand that the old beneficiary might prefer that, but in the these circumstances then the executor is perfectly entitled to follow the will and pass the money to the old beneficiary and let them pass the money on. The DOV makes it clear that its not part of his estate so there's no issues - unless they were trying to hide the money as they're on benefits that would be reduced if they had money, in which case the executor certainly wouldn't want to be involved in assisting such actions.

AIUI, a DOV does not get round the potential for DOA.

It's just a mechanism for reducing potential IHT, nothing else.

Smudgeismydog

Dodge1664 said:

thanks for the replies. I think the Executor might have concerns that if he just pays out the money to the new beneficiaries as per the DoV, then there might be trouble if the old beneficiary then complains that he hasn't received his money. The Executor has met the benficiaries but doesn't know them personally. The old beneficiary would prefer to avoid the money appearing on his account so that it’s clear that it’s not part of his own estate.

I’m in agreement with the other posters, the executor is required to follow the terms of the Will. They pay the original beneficiary, who then executes the Deed of Variation and pays on to their selected beneficiary.

The deed is retained as evidence that the money does not form part of their estate.

SadCodeMan

Would it be ok to ask if there are any official links to confirm the understanding of who would/should implement the DoV? 

I am abosultely not saying the view above are not correct but just wanted some comfort to make sure I am doing things right.

Two things worry me about the view that the original beneficiary is the one to need to do this:

1) The suggestion on the HMRC checklist form is that the DoV varies the distribution as if the deceased had made it. That could read as meaning that the executor should then be acting on the change as if it had origninally been in the Will?

2) If the change affects tax, that tax would need to be paid/recovered but only the executor (I am guessing) could do that? (And the amounts to be distributed would be affected by this)

Neither of those in any way suggest that it couldn't be the beneficiary that needs to pass on the money but I thought I would check.
It also seems it would be much simpler for the executor to be in control of all of this (not that that is in any way a good predictor of the correct proceedure!)

Sea_Shell

SadCodeMan said:

Would it be ok to ask if there are any official links to confirm the understanding of who would/should implement the DoV? 

I am abosultely not saying the view above are not correct but just wanted some comfort to make sure I am doing things right.

Two things worry me about the view that the original beneficiary is the one to need to do this:

1) The suggestion on the HMRC checklist form is that the DoV varies the distribution as if the deceased had made it. That could read as meaning that the executor should then be acting on the change as if it had origninally been in the Will?

2) If the change affects tax, that tax would need to be paid/recovered but only the executor (I am guessing) could do that? (And the amounts to be distributed would be affected by this)

Neither of those in any way suggest that it couldn't be the beneficiary that needs to pass on the money but I thought I would check.
It also seems it would be much simpler for the executor to be in control of all of this (not that that is in any way a good predictor of the correct proceedure!)

Think of it this way...

I'm due an inheritance, it's sorted quickly and I receive a payout within 12 months.

6 months later, I decide to pass this ££ on to someone else, and I have a DOV drawn up.

I make a bank transfer, and keep the deed with my paperwork, for MY executors.