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

SadCodeMan

I am not saying there are no examples where it would be much simpler for the beneficiary to do it. I am simply saying there are other times where it makes more sense for the executor to take the role.

I know this was not the example you were giving but I use it just to show it might not be so simple.

In your example, what if you had been married to the deceased?
In that case your decision to redirect the ££ could have an IHT implication. That would need to be paid. Would you have all the details to be able to do that?

Or another example
It was one of your parents who died and you redirect the money to a surviving parent to reduce IHT. In that case the additional value in the estate might result in aditional distributions being needed to other beneficiaries (maybe many of them). 

Hence my point. Not that it could not be done by the beneficiary but there are real examples where it is simpler for the person already dealing with things just to add it to the mix and get all things sorted at once.

I was just trying to find some official docs which said that it *had* be done by the beneficiary or if the executor could do it as part of the normal process instead (if it is easier to do that).

I absolutely see that the original beneficiary will need the paperwork for their executors when the time comes. That isn't really the bit I am trying to clarify.

GDB2222

I’m intrigued by the idea that the cost of any legal advice on the DOV should come from this beneficiary’s share. Is that obvious? 

phlebas192

There's a checklist that should be completed with a DoV, see https://assets.publishing.service.gov.uk/media/5a7df4d040f0b6230268838d/IOV2.pdf

This makes it clear what the IHT implications are (*). If the DoV results in a change to IHT payable then a copy of the DoV and the checklist must be sent to HMRC and if there is more IHT to pay then the executors / administrators must sign the DoV.

* - it doesn't actually state who should pay any additional IHT due but it would seem logical that it should be the original beneficiary. If the executors paid it out of estate assets then it would reduce the amount payable to any other residual beneficiaries and hence the DoV would not be valid unless all those affected were making the DoV.

Keep_pedalling

SadCodeMan said:&

I am not saying there are no examples where it would be much simpler for the beneficiary to do it. I am simply saying there are other times where it makes more sense for the executor to take the role.

I know this was not the example you were giving but I use it just to show it might not be so simple.

In your example, what if you had been married to the deceased?
In that case your decision to redirect the ££ could have an IHT implication. That would need to be paid. Would you have all the details to be able to do that?

A DoV id not at all appropriate in that situation. It has no tax advantages, and if the surviving spouse survives 7 years it could lead to more IHT being paid than would have been due if the money had simply been gifted.

Or another example
It was one of your parents who died and you redirect the money to a surviving parent to reduce IHT. In that case the additional value in the estate might result in aditional distributions being needed to other beneficiaries (maybe many of them). 

Hence my point. Not that it could not be done by the beneficiary but there are real examples where it is simpler for the person already dealing with things just to add it to the mix and get all things sorted at once.

I was just trying to find some official docs which said that it *had* be done by the beneficiary or if the executor could do it as part of the normal process instead (if it is easier to do that).

I absolutely see that the original beneficiary will need the paperwork for their executors when the time comes. That isn't really the bit I am trying to clarify.

Only a loosing adult beneficies can make a DoV no one else can do it for them (someone could draft it for them but they have to sign it), which is why one cannot be made where a minor is the beneficiary. 

https://assets.publishing.service.gov.uk/media/5a7df4d040f0b6230268838d/IOV2.pdf

SadCodeMan

I think maybe my post is not very good! Sorry!

I am asking.

Can the executor carry out the wishes expressed in the DoV which has been signed by the beneficiary?

Or does it *have* to be the beneficiary that actually moves the money and performs all the administrative work associated with it?

Some of the posts hinted that it needed to be the latter but I am checking if that is the case.

RAS

Often, the main reason for  DOV is to reduce the IHT liability of the beneficiary's estate. If money goes direct to grandkids, their parent's estate pays less IHT. So the information needs to be with the parent's will.

Notepad_Phil

SadCodeMan said:

I think maybe my post is not very good! Sorry!

I am asking.

Can the executor carry out the wishes expressed in the DoV which has been signed by the beneficiary?

Or does it *have* to be the beneficiary that actually moves the money and performs all the administrative work associated with it?

Some of the posts hinted that it needed to be the latter but I am checking if that is the case.

I'm definitely not a lawyer but I've never read anything saying that the payments reflected in a DoV have to be carried out by a certain party. Indeed a DoV can be written long after a will has been distributed and so the executor wouldn't be able to do the payments anyway..

So if an executor is asked to do so and they are willing then yes they can do everything needed, but they cannot be forced to do so if they have concerns (which I thought in this case they had).

Note that the person writing the DoV has certain obligations placed on them as detailed in the checkpoint link given by phlebas192 above, so the executor is covered if there are subsequent hmrc issues from a DoV that they were not aware of.

SadCodeMan

Notepad_Phil said:

So if an executor is asked to do so and they are willing then yes they can do everything needed, but they cannot be forced to do so if they have concerns (which I thought in this case they had).

You are absolutely right about that being the case in the original question. It prompted me to ask a linked question which ended up causing more posts than I had expected. Sorry. I would have started a separate thread if I had known when posting...

As an aside, it was exactly that document that I had been looking at and which prompted me to ask the original Q!

Thanks very much for answer.

GDB2222

Would a reasonable compromise be as follows:

Explain to the beneficiary that the executor is uncomfortable with the DOV, but they are willing to take legal advice about it providing the beneficiary will pay for the advice.

If the beneficiary doesn’t agree to pay, the executor will simply pay out in accordance with the will.


I feel that this has gone full circle, because that’s more or less what was in the OP.

Shelldean

The beneficiary isn't trying to divert funds to avoid losing benefits are they?