Life interest trust deed of variation

mossy26

Hello, I was given some very helpful advice on this forum when I started my application for probate for my late father, and probate has now been granted.

He left his 50% of the property he owned with his Widow (my stepmother) in a life interest trust with her as the beneficiary, and which I will inherit eventually.

The trust has been registered, through a trust specialist solicitor, who have advised that nothing needs to be done with the property deeds.

He also had an income bond with NS& I, of 75k, which is also included in the trust. It was suggested that as this was such a small amount, and for the work involved for the trustees was unlikely to benefit my stepmother massively, that we set up a deed of variation and split this sum between my stepmother and I. The trustees have now had a chance to look into their options, and believe that this is the best option.

Does anyone have any experience of doing this? As executor can I DIY this or do we need a solicitor? Does a deed of variation need to be registered anywhere? If both my stepmother and I agree to this and sign a letter, can I as executor just distribute the 75k as agreed once the NS&I close his account and transfer the funds?

poseidon1

I outlined my view of the DOV process on 9 March of your first post below -

https://forums.moneysavingexpert.com/discussion/6658739/life-interest-trust-help

Because you are varying a trust asset I would suggest a solicitor draft the relevant deed. I doubt anyone here has executed a DOV related to trust assets on a DIY basis.

As to whether HMRC needs to be notified, this will all depend on what basis the solicitor originally arranged registration of the trust on the trust register.

If they identfied the trust as a taxable entity because of the taxable interest from the bond, then the register would need to be updated ASAP so that HMRC can switch off issuing future trust income tax returns.

However, bear in mind the DOV is not retrospectively effective for income tax purposes. Therefore bond income received from date of death until execution of the DOV belongs to and is taxable on the beneficiary originally entitled ( ie your step mother).

Presumably if the solicitor who registered the trust is familiar with DOVs and trust/estate income tax compliance, they can handle these matters for the parties concerned.

mossy26

Thank you. It seems more complicated than we had hoped. I will advise the trustees to contact their solicitor.