Scottish law, legal rights claim, and deed of variation

iwilson16 · 9 October 2017 at 2:14PM

I am executor of my late step-mothers will. Her two children (both adults) are not named in the will, but plan to claim 50% of the estate as is their right under Scottish law (my father passed away 5 years ago, so there is no surviving spouse). Only two out of three grandchildren are named in the will.

Can one of the children use a deed of variation to pass on their portion of the 50% to someone else (the grandchild missed of off the will, in this case)?

Thanks
Ian

getmore4less · 9 October 2017 at 3:27PM

its not 50% of everything just the moveable estate.

DOV tax wrappers around gifts by beneficiaries to others.

Executors don't need to get involved in DOV unless they change the inheritance TAX.

Yorkshireman99 · 9 October 2017 at 5:20PM

iwilson16 wrote: »

I am executor of my late step-mothers will. Her two children (both adults) are not named in the will, but plan to claim 50% of the estate as is their right under Scottish law (my father passed away 5 years ago, so there is no surviving spouse). Only two out of three grandchildren are named in the will.

Can one of the children use a deed of variation to pass on their portion of the 50% to someone else (the grandchild missed of off the will, in this case)?

Thanks
Ian

Children under 18 can’t inherit directly or consent to a DOV. So it seems you are snookered. In any case it is for the beneficiaries to deal with not the executor.

Keep_pedalling · 9 October 2017 at 6:01PM

All her children can claim is a portion of the movable estate. Any property or land can be distributed as per the will, but cash savings, stocks and chattels fall under movable estate.

I would not try to DIY this you need professional advice.

comeandgo · 9 October 2017 at 6:05PM

Unnamed children can claim one third which is divided amongst the children, as two each get a sixth of moveable estate.

getmore4less · 9 October 2017 at 8:53PM

There are complications if a beneficiary gifts through a DOV to their own minor children(it can be done) the tax treatment is different to and adlut or other minor and is not straight forward.

sleepless_saver · 9 October 2017 at 9:23PM

The exercise of legal rights is a completely separate matter from the will and so there can be no deed of variation, which is by definition variation of a will. With legal rights there is nothing to vary. Obviously the adult child can pass the money to the grandchild but would not have any of the IHT benefits they might have had from a DoV.

Comeandgo, the adult children are entitled to 50% of moveable estate because there is no spouse or partner. If there had been a spouse it would indeed have been a third.

Yorkshireman99, I understood the OP was referring to the adult children choosing to make a deed of variation. The age of the grandchild would have been irrelevant.

Yorkshireman99 · 9 October 2017 at 9:27PM

sleepless_saver wrote: »

The exercise of legal rights is a completely separate matter from the will and so there can be no deed of variation, which is by definition variation of a will. With legal rights there is nothing to vary. Obviously the adult child can pass the money to the grandchild but would not have any of the IHT benefits they might have had from a DoV.

Comeandgo, the adult children are entitled to 50% of moveable estate because there is no spouse or partner. If there had been a spouse it would indeed have been a third.

Yorkshireman99, I understood the OP was referring to the adult children choosing to make a deed of variation. The age of the grandchild would have been irrelevant.

The OP said grandchildren so I assumed they were minors. As post #4 the OP needs professional paid for advice. It would be folly to do otherwise.

getmore4less · 9 October 2017 at 10:54PM

sleepless_saver wrote: »

The exercise of legal rights is a completely separate matter from the will and so there can be no deed of variation, which is by definition variation of a will. With legal rights there is nothing to vary. Obviously the adult child can pass the money to the grandchild but would not have any of the IHT benefits they might have had from a DoV.

Comeandgo, the adult children are entitled to 50% of moveable estate because there is no spouse or partner. If there had been a spouse it would indeed have been a third.

Yorkshireman99, I understood the OP was referring to the adult children choosing to make a deed of variation. The age of the grandchild would have been irrelevant.

DOV can also be done by beneficiaries of an intestate they do not really modify wills the give tax benefits to gifts by the beneficiary as if they were made by the testator.

there may be something that prevents a beneficiary of legal rights gifting their legacy and applying the tax benefits of a DOV.

One potential issue that many may overlook with a DOV to their minor children is there is no income tax benefits protection on the gift. so it gets taxed like other gifts to kids by their parents.

iwilson16 · 10 October 2017 at 12:18PM

Thanks for all the replies. Not sure I am any clearer on the matter though :-)

I am taking legal advice. Have an appointment with my step-mothers solicitor tomorrow. I just wanted to get more of a clue before seeing him. I plan to ask this solicitor to do the confirmation process (Scots version of probate), and to in-gather the estate.

The situation is daughter #1 has two children, both over 21, but only one is bequeathed 50% of estate. Daughter #2 has 1 child (age 17), who is bequeathed the other 50% of the estate.

The estate is all moveable as I understand things. The family home was sold earlier this year when she went into a care home. Total estate is approx £660k.

Both daughters will be claiming their legal right of 25% each. Leaving 25% remaining to the two named grandchildren.

Daughter #1 wants to gift her 25% to the grandchild left out of the will, so that the grandchildren all get equal amounts. Its this transaction I wanted to know the tax implictions. This grandchild is an adult, working as a teacher. What are the tax implications of her mother gifting her the approx £165k?

Daughter #2's son is under 21, so hit share will be placed in a trust. Daughter #2 will keep her 25% and invest it with hew own IFA.

Note that my step-mother has double inheritance tax allowance, as my siblings and I renounced our claim on my fathers estate when he passed 5 years ago in order for my step-mother to get his allowance. My fathers estate of approx £133k all passed to my step-mother. She wanted an equivalent sum to go to us, but might have had need of the money herself, so £133k was placed in a trust, with myself and 3 siblings as beneficeries, to be paid to us when my step-mother passed.

Yorkshireman99 · 10 October 2017 at 12:44PM

iwilson16 wrote: »

Thanks for all the replies. Not sure I am any clearer on the matter though :-)

I am taking legal advice. Have an appointment with my step-mothers solicitor tomorrow. I just wanted to get more of a clue before seeing him. I plan to ask this solicitor to do the confirmation process (Scots version of probate), and to in-gather the estate.

The situation is daughter #1 has two children, both over 21, but only one is bequeathed 50% of estate. Daughter #2 has 1 child (age 17), who is bequeathed the other 50% of the estate.

The estate is all moveable as I understand things. The family home was sold earlier this year when she went into a care home. Total estate is approx £660k.

Both daughters will be claiming their legal right of 25% each. Leaving 25% remaining to the two named grandchildren.

Daughter #1 wants to gift her 25% to the grandchild left out of the will, so that the grandchildren all get equal amounts. Its this transaction I wanted to know the tax implictions. This grandchild is an adult, working as a teacher. What are the tax implications of her mother gifting her the approx £165k?

Daughter #2's son is under 21, so hit share will be placed in a trust. Daughter #2 will keep her 25% and invest it with hew own IFA.

Note that my step-mother has double inheritance tax allowance, as my siblings and I renounced our claim on my fathers estate when he passed 5 years ago in order for my step-mother to get his allowance. My fathers estate of approx £133k all passed to my step-mother. She wanted an equivalent sum to go to us, but might have had need of the money herself, so £133k was placed in a trust, with myself and 3 siblings as beneficeries, to be paid to us when my step-mother passed.

It is not possible to limit inheritance beyond 18 any more. You need a solicitor who is clued up on trusts and IHT. Not all are!

Scottish law, legal rights claim, and deed of variation

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