IOV - formal deed or informal letter?

[Brian312]

My father died in Sep 2004 leaving an estate of £40k in bank plus £100k house to be shared by 4 sons. After house sale I received a cheque for my £35k share in Apr 2005. I now wish to vary the will to pass my full share direct to my 2 sons (£17.5k each). I realise I must prepare any deed of variation by Sep 2006. Booklet IHT8 and IOV2 checklist say that a formal Deed is not necessary and that I can ‘…use a letter or other document.’

Is it better to get a solicitor to draw up a simple Deed and how much is it likely to cost. Alternatively does any ‘letter’ which I prepare have to be signed by anyone other than me (eg by my 2 sons as the new beneficiaries); and do these signatures need to be independently witnessed by a third party?

After letter is signed do I just give each son a cheque for £17.5k and a copy of the variation letter, or is there anything else I need to do?

Any advice would be welcome. Thanks

[iandouglas]

A 'Deed of Variation' need indeed not be a deed!

The only possible effect of the variation will be on an IHT liability in your estate if you die within 7 years.

In view of the apparent simplicity of your situation I would recommend DIY; a clear document of variation referencing your Dad's will/probate stating that you intend to vary the will to leave you share to your sons. Have it witnessed by someone independant & keep it safe for 7 years.

Ian Douglas - County Wills - 0871 2220981

[Brian312]

Thanks for the prompt response; I think I probably will use the DIY approach.

However I was surprised by your comment that it may affect IHT liability on my estate if I die within 7 years - I thought the effect of variations was that it would be treated as though the funds were left by my father direct to his grandsons, and that I WAS left out of the IHT equation - I thought that one reason why a Deed of Variation would be useful was that it would not form any part of my IHT liability at any point?

Is anyone with knowledge of this aspect able to clarify whether or not the £35k I was left by my father would still be part of my estate for 7 years, even though I pass it by variation to by own sons?

[iandouglas]

You mis-understood me - or perhaps I wasn't clear enough. The variation will have just the effect you say of taking the £35K out of your estate with immediate effect.

What I said was that will be the only effect. So even if you inherited & then just made a straight gift of the £35K without the variation if you live 7 years there's no IHT implication.

It was all so clear in my head!!

Ian Douglas - County Wills - 0871 2220981