It is not a well known fact that, beneficiaries of a will or intestacy can alter or rearrange the deceased persons affairs after their death by use of a Deed of Variation.
A Deed of Variation can be used by a beneficiary who wants to redirect the assets he is entitled to receive from the estate, such as land, cash, a share in the residuary estate or a beneficial interest in a trust to his chosen beneficiaries.
A beneficiary may want to redirect the assets to which they would otherwise be entitled for a number of reasons. For example, to pass assets on to the next generation or to save inheritance tax.
The main effect of a Deed of Variation is that the alteration made by the Deed is treated as having been made by the deceased person and not by the person giving up his entitlement. This means that the usual rules applying to lifetime gifts do not apply and the person giving up their entitlement does not have to survive seven years to avoid the gift being included in his estate for inheritance tax purposes.
In order for a Deed of Variation to make use of the intended inheritance tax advantages it must be completed with two years of the date of death and fulfil the following requirements:
A Deed of Variation can be a very useful tool when it comes to tax planning. If you would like further advice regarding Deeds of Variation, Wills or Inheritance Tax please contact a member of our specialist team on:
If you would like to discuss any of the above with us please contact Victoria Emmett.