Deeds of Variation (or Instruments of Variation)

at the moment a Deed of Family Arrangement or Instrument of Variation completed and delivered within 2 years of death can write or re-write the deceased’s Will, and for IHT and Capital Gains Tax purposes, provided:

a)      everyone adversely affected agrees

b)      there is no reciprocation – no one is compensated for what they give up.

c)      none of the assets are affected by a Gift With Reservation

d) if the variation affects the rights of children or unborn children, Court approval will probably be needed.

It is possible to amend (“vary”) a Will or indeed an Intestacy after a death. There are many reasons why this may be desirable, for example, to balance the differences in the finances of the beneficiaries (perhaps from a rich brother to a poor sister), or to pass the inheritance on to the next generation rather than swelling the (taxable) estates of well heeled parents (maybe in modest health) to struggling grand or even great-grandchildren.

Normally, a variation takes effect from the date of the document varying the inheritance. But provided those making the variation comply with the requirements, it can be treated for inheritance tax (IHT) and certain capital gains tax (CGT) purposes as if it had been made by the deceased on the date of death.  IHT is recalculated taking account of the variation being made. And a nice big refund cheque of up to £120,000 – plus interest  (we can help!)

WARNING

Some advisers consider Deeds or Instruments of Variation will solve all problems after death, so Will planning is of limited value.  We think such advice is dangerous, as the loophole could be removed at any time.

We work with SWWTrust.co.uk for Deeds of Variation and Probate matters. You can call them direct on 01522 687 888 Option 2, but please mention Allied Professional Will Writers ....

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