Deed of Variation Disclosure – a readers question.
I am the sole executor and a major beneficiary in a will that names 15 other beneficiaries and I have a question about Deeds of Variation.
I would like to make a deed of variation so that my inheritance passes either directly to my children or to my grandchildren. As I understand it that means that my estate would not be liable for any Inheritance Tax if I died within 7 years.
I have not discussed this with them yet as I want to know if it is possible to do this before I talk to them.
If I make the variation when I send the distribution account to all of the beneficiaries would I show myself as the beneficiary or those named in the deed of variation?
Deed of Variation Disclosure Answer.
The most common reason for Deeds of Variation is, as you say, to legally avoid unnecessary Inheritance Tax.
Too often, people’s Last Wills are not kept up to date and already wealthy children inherit money they have no need for from their parents, when their children and grandchildren are in genuine need of help with massive mortgages, school or university fees to pay.
Creating a variation to under age children is more complex than a standard variation as it means that trusts have to be created.
As far as the distribution account, it should reflect the actual situation, but if you don’t want to tell others, use the deed of variation immediately after you have distributed to the other beneficiaries. In other words, there is no reason that anyone other than your intended beneficiaries even knows you have made the Deed of Variation (apart from us and HMRC of course!) So in general, there is no requirement for deed of variation disclosure except to the Taxman where it affects Tax, normally IHT or capital gains tax.
I have had a word with Deed of Variation and tax planning experts and it is likely that we would charge just our basic fee for such a variation.
Main Deed of Variation page.