Deed of Variation and Life Interest

[rachyoungs]

I hope you will be able to help me with a query arising form my grandmother's will (she died 3 months ago).

After a small donation to her local church, my grandmother's will leaves the interest in the residue of her estate to my mother for her lifetime and thereafter the capital to be split between my sister and I. All 3 of us would like to split the capital 3 ways. I have been conversely told that a)we can do this via a deed a variation and b) we cannot do this and the best we could do is a deed of disclaimer so that the trust is accelerated and then my sister and I would have to gift a third of what we receive to my mother, potentially exposing us to IHT if we die within 7 years.

I should add that we are under the IHT threshold and probate has already been granted,

Are you please able to offer me any guidance?

[Lee Young]

If between the three of you you are entitled to the entire estate (ie that your entitlement depended on your surviving your grandmother and not on eventually surviving your mother) then you can together vary the terms of the will and state whatever the three of you like. Inevitably it depends on the wording of the Will which will need to be reviewed carefully.

[maths]

Lee

On the death of the grandmother is it not the case that the daughter plus her children are entitled to the complete equitable interest in the residue and thus can vary as agreed amongst themselves?

I'm a little unclear on your statement:

(ie that your entitlement depended on your surviving your grandmother and not on eventually surviving your mother)

[Lee Young]

If they do not inherit till the mother dies, then their interest is contingent - if they were to die others might benefit, ie their children, who might be under age, in which case the three of them currently are not the entire goup of potential beneficiaries and therefore not able to vary the estate.

If their interest is vested already,and just subject tothe prioor life interest, then I agree with you.

[maths]

Do we agree that per Saunders v Vautier the trust can be brought to an end now?

So for example the trust could be partitioned.

However, a DoV may nor be possible in terms of seeking to vary the whole of the interest under the trust in view of your last posting.

Perhaps a simple disclaimer by the mother is the best way forward?

IHT appears to be irrelevant.

[rachyoungs]

Thanks for all your answers. I think I am clear now. The will provides that the residue should be paid to my sister and I if we survive my mother and grandmother and if we do not survive them then it goes to our children. I think this means we must do a Disclaimer?

Thanks again.

[Lee Young]

I agree with Maths that the best solution would appear to be a disclaimer. As under a disclaimer you do not get to chose who gets the assets you need to take advice to ensure it does go where you think it should before you do it!