Deed of Variation

[jacky]

My mother and father owned their house in north Wales as tennants in common. On the death of my mother in January 2003, her half of the house passed to myself and my 2 brothers. My father is very concerned that the chancellor intends to change the law and make him pay tax on the benefit of living rentfree in the whole house. We understand that it is possible to change the will by deed of variation within 2 years. Is there a change that could be made that would improve his tax position?

[James Smith]

Jacky,

There is a lot that the chancellor may or may not do. Generally speaking the format is the same pre big announcement, say its going to be terrible, get some good press stories (the press love some doom and gloom), and then announce something not quite so bad so the bad news seems like a relief.

I of course donÂ’t know what WILL happen, but retrospective changes in this manner are not all that likely.

You do still have time for a deed of variation, but I personally wouldnÂ’t do anything based on rumour especially as you may well end up with a lot more IHT in the long run depending on your circumstances. I would suggest you discuss matters with your normal financial advisor to establish if the original arrangement is beneficial.

Regards

James Smith
Chartered Accountant
www.jamesesmith.co.uk
01284 764436