Monthly Archives: April 2014

Advice on Deeds of Variation Conflicts – What To Do

Question: Advice on Deeds of Variation Conflicts – HELP!

A reader has received advice  on Deeds of Variation which conflicts, and has asked us to review the conflicting responses and advise which (if either) is the right advice.  Here goes the question and the advice which had already been received.

“I have been given conflicting advice by two solicitors on whether or not I can have a Deed of Variation prepared.

This is what one said:

1) “For a variation to be effective it needs to take place within two years of the death. More importantly, all the Executors and Beneficiaries will need to agree that the variation can take place.  If they cannot all agree, the Deed of Variation shall not be valid”.

The other went on a slightly different tack:

2) “Another example where a variation might assist is where a parent leaves their estate equally between their children. The children may well be wealthy in their own right and would not want to benefit from the estate as it would simply increase the potential Inheritance Tax (IHT) liability upon their own death. If this is the case, and it can be agreed, then the deceased’s grandchildren could benefit instead, therefore bypassing the children altogether. However, if the grandchildren are under the age of 18, the Court would need to approve such an arrangement.”

Can you confirm the situation?

Kind regards.

L

Our response: Advice on Deeds of Variation Conflicts.

Both are nearly correct, but have missed important information out in paraphrasing so are unintentionally misleading.

Clearly it is important to deal with a firm which regularly creates Deeds of Variation and fully understands them and their uses (i.e. us!)

Answer 1) Who has to agree to a Deed of Variation?

Only people affected negatively by the Deed of Variation need to agree – that is, those folk who are giving up something they could have received under the terms of the Will or intestacy. It is nothing to do with anyone else.

Answer 2) Issues over Children and Deeds of Variation

Court approval is only needed if the affected beneficiaries (those giving up something) are under 18 which doesn’t mean that the people benefiting from the Deed of Variation, can’t be under 18 – the age limit is for those giving something up.  That said, there are special issues with children in that they cannot give a valid receipt, so the inheritance needs to be kept in trust until they are 18 or marry (if earlier.)

Not at all what they seem to be saying in 2) above, but perhaps they go on to qualify their answers.

So if the first one added “affected” after all the, it would be correct.
The second one would need to remove “grand” from grandchildren to be correct.

More on Deeds of Variation (also known as Deeds of Family Arrangement).