Written simple variation of a will

Skint_yet_Again

After looking at gov.uk and IOV2 and IHT35000 onwards I have written a simple letter to vary part of my cash residual estate inheritance from my father to pass instead my son.

There is no additional tax on the estate and it is my understanding that as it is not a deed only the original beneficiary needs to sign it and no witness is required. It is within 2 years of death. It meets the criteria of IOV2.

I would be grateful for any advice or comments. The estate has already been distributed and the executor account is closed. I was one of the executors. The money will be transferred directly from my bank account to the new beneficiary after I sign the letter. The original document will be kept by me with my father’s original probate & copy of his will. No need to send to HMRC. Copy of the letter to be held with my will and copy to be given to the new beneficiary.

Date

Deceased’s name and last address

Date of death

Date of will

Original beneficiary (one of executors) name and address

New beneficiary name and address

(Original beneficiary current entitlement under will)

(How this is to be varied)

This variation is made voluntarily for no consideration

It is intended that the provisions of Section 142(1) of the Inheritance Tax Act 1984 and Section 62(6) of the Taxation of Chargeable Gains Act 1992 shall apply to this variation

Signed (Original beneficiary)

Misha96

I made a deed of variation via a solicitor. My signature was witnessed and so was the signature of the new beneficiary. There were two forms/ letters.

Skint_yet_Again

Thanks @Misha96 as mine is not a deed I believe it does not need to be witnessed.

Just also to add to my original post, my son is over 18.

Woodstok2000

Heres a guide:

https://www.gov.uk/government/publications/inheritance-tax-instrument-of-variation-checklist-iov2

Skint_yet_Again

Thanks @Woodstok2000 that is the guide I have used along with IHT35000

Dead_keen

It would be more helpful to others to include examples of the bits and pieces you have missed out. And without it, is not possible to see if it is fit for purpose.

Saying that I would make some changes to make it incredibly obvious that the conditions have been met. What I would not want is to cause my executors to get nervous that it isn't quite right or for an HMRC officer have to ask her boss that a condition is satisified (vs having to spend £5,000 on professional fees or spending a £100,000 getting the tax tribunal to agree it is actually all fine):

1. I would tighten it to make the (necessary) link between the original disposition and the new destination.
   
2. I would add some operative wording. Putting those first two points together, something like:

I am changing the gift made to me under clause [number] of my father’s Will. Instead of receiving all of my entitlement to the net residuary estate, I direct that £[amount] of it passes to my son, [son’s full name and address], for him to keep absolutely.

My father’s Will is to take effect as if it had left that amount directly to my son.

3. You don't need the TCGA provision as your disposition just involves cash so with your minimalistic style, you could delete that bit.

4. I would change it to make clear that it is me that wants the variation to have the IHT effect. So rather than "It is intended", I'd use "I intend". In case people read it where more IHT is due because of the variation, "I" would not be sufficient.

5. I think your no-consideration language is a bit weak and allows a question to be begged. I'd prefer something like:

No consideration in money or money’s worth has been given or will be given by any person for or otherwise in connection with this variation.

6. I prefer to use full stops to end sentences.

Skint_yet_Again

Thanks @Dead_keen

Sorry here are the missing parts

“I am currently entitled to 1/3 share of the residuary estate under the will detailed above.

I wish to vary my entitlement to reduce it by £xxx so that the same fixed sum of £xxx is redistributed from the estate to the new beneficiary (above) absolutely.

There are full stops I just left them off the original post 😉

Skint_yet_Again

I should maybe also point out that the family home and car were sold (as per the will) for less than the valuation and the residual estate distributed according to the will so I thought I should include the TCGA statement?

Dead_keen

I should maybe also point out that the family home and car were sold (as per the will) for less than the valuation and the residual estate distributed according to the will so I thought I should include the TCGA statement?

Ok. So that's not hugely specific about what happened. Can I assume the sequence is:

1. The executors sold the assets.
2. Any CGT consequences of those sales belonged to the estate during administration.
3. The beneficiary received cash as part of the residue.
4. The later variation redirects part of that cash entitlement.

If so, you don't need the TCGA statement but there is no harm in including it. If it is different then it would be worthwhile you explaining that.

If IHT was paid, the executors might also consider the separate IHT loss-on-sale-of-land relief (*).

(*) terms and conditions apply.