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Where Taxpayers and Advisers Meet

deed of variation non dom to dom inheritance

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am
deed of variation non dom to dom inheritance

Postby riccardob » Sat Nov 19, 2016 3:56 pm

hi, would a deed of variation be useful if:

a) is a foreign non dom never been in uk who leaves assets to b) who is foreign born but possibly uk dom and b)wishes to transfer
the whole inheritance to c)

a) is brother of b) and b) is father of c)

all of the assets are outside the uk.

would a deed of variation help to avoid iht once b) passes away?
is there a time li it for the transferred assets to fall out of the iht?

manythanks

maths
Posts:8209
Joined:Wed Aug 06, 2008 3:25 pm

Re: deed of variation non dom to dom inheritance

Postby maths » Sat Nov 19, 2016 4:32 pm

Yes.

A DoV exercised by (b) in favour (c) would mean that on (b)'s death no part of the original inheritance will fall into his estate for UK IHT as the inheritance is part of (c)'s estate.

The DoV needs to be executed within 2 years of (a)'s death.

If (b) is UK domiciled it may well be that (c) will be UK domiciled.

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am

Re: deed of variation non dom to dom inheritance

Postby riccardob » Tue Nov 22, 2016 12:07 pm

thanks maths.

am i right in saying that the seven year rule does not apply to dov?

Also if everyone is considered not uk domiciled at the time of the dov been drawn would this document still be valid
if any party then assumes uk domicile at a later stage?

maths
Posts:8209
Joined:Wed Aug 06, 2008 3:25 pm

Re: deed of variation non dom to dom inheritance

Postby maths » Wed Nov 23, 2016 8:18 pm

am i right in saying that the seven year rule does not apply to dov?
Correct; 7 year rule is irrelevant to a DoV.
Also if everyone is considered not uk domiciled at the time of the dov been drawn would this document still be valid
if any party then assumes uk domicile at a later stage?
Yes. All a DoV is in fact is a redirection of an inheritance (albeit certain tax fictions are created). So X dies leaves something to Y.
But, for example, Y doesn't want it for whatever reason. So, Y makes a gift of the inheritance to Z.
However, for IHT this is treated as if X on death had left the inheritance directly to Z not Y.

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am

Re: deed of variation non dom to dom inheritance

Postby riccardob » Thu Dec 15, 2016 8:41 pm

many thanks for you reply.

is a solicitor needed to draft a dov or is a letter written by the heirs enough?

does the document or letter need to be lodged at hmrc?

can a dov only cover part of an estate or does it have to be the whole lot?

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am

Re: deed of variation non dom to dom inheritance

Postby riccardob » Fri Dec 16, 2016 4:27 pm

many thanks for you reply.

is a solicitor needed to draft a dov or is a letter written by the heirs enough?

does the document or letter need to be lodged at hmrc?

can a dov only cover part of an estate or does it have to be the whole lot?
I also meant to ask whether a DOV can still be used if B received inheritance from A on the basis of intestacy rules rather than a will. B would like to divert ih to C.


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