INDEPENDENT FINANCIAL ADVICE CENTRE

Authorised and Regulated by the Financial Conduct Authority

97 High  Street

Billericay

Essex

       CM12 9AJ

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Your Home is at risk if you do not keep up any mortgage or payments secured upon it!

You should remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of units, and the value derived from them, to fall as well as rise and you may get back less than you invested when you decide to sell your units. The tax treatment of investments and pensions is not guaranteed and may change in the future.  

A Deed of variation allows the beneficiaries of a Will to change its contents after the death of the individual concerned.



The Deed of Variation must be effected within two years of the death of the individual and although extremely useful should not be relied upon as part of an individuals estate planning. It may be that the effectiveness is reduced by the Government in the future. However at present they do offer the personal representatives an effective way of changing a will after death.


All the beneficiaries of the will must be in agreement. If minors are involved this is further complicated as they cannot themselves consent to the changes and an application must be made to the courts for consent to be obtained on their behalf.


The Deed itself must contain a statement that variation has an effect for inheritance tax as if the deceased had made the changes prior to death. The statement must be signed by all parties and where there is an additional tax liability must be signed by the Personal Representatives. Approval could be refused if there are insufficient assets available to pay the tax.


A Deed of Variation can be useful where other beneficiaries have need of assets or where the default beneficiaries want to reduce their estate/estates for IHT purposes, i.e. that part of the estate (below the nil rate band ) could be passed to the deceased's children in order to reduce the estate of the remaining spouse at death. The spouse in this instance would lose the assets however the beneficiary could support the widow if she had insufficient funds.


It must be remembered that although the person who disclaims their interest is not the settlor for inheritance tax purposes they are for income tax purposes. Where the Deed passes the assets to the grandchildren (minors) any income generated by the money (over £100) will be treated as their parents and taxed at their highest rate. Therefore foregoing their legacy may lead to further tax consequences which should be considered.


If you would like further information on inheritance planning or estate planning please contact us.

THE ADVICE CENTRE - making sense of a complicated world


DEED OF VARIATION

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