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Where Taxpayers and Advisers Meet

question on deed of variation

riccardob
Posts:105
Joined:Sun May 29, 2011 10:02 am
question on deed of variation

Postby riccardob » Thu Dec 29, 2016 2:35 pm

Hello,

Can a deed of variation only cover part of an inheritance or does it have to be for the whole lot?
Also would a letter suffice as a deed of variation or does it need to be drafted by a solicitor and lodged at HMRC?

Thanks

pawncob
Posts:4639
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: question on deed of variation

Postby pawncob » Thu Dec 29, 2016 6:01 pm

A Deed of Variation is just that A DEED. It must be written, signed, witnessed (and delivered) as a deed.

As all parties must agree to the variation, it can cover any part of the assets.
With a pinch of salt take what I say, but don't exceed your RDA

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

Re: question on deed of variation

Postby riccardob » Thu Dec 29, 2016 7:50 pm

thanks.

does the deed need to be lodged at hmrc even if the person passing on the assets it is still alive?

pawncob
Posts:4639
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: question on deed of variation

Postby pawncob » Thu Dec 29, 2016 9:35 pm

You can only vary a will after death.

Write a new will.
With a pinch of salt take what I say, but don't exceed your RDA

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

Re: question on deed of variation

Postby riccardob » Thu Dec 29, 2016 10:08 pm

the person is already dead.
i'll explain better: a has died and b has inherited from a but b is old and wants to donate to c.
as I understand it a dov written by b would help c avoid iht on b death.
is this correct?
if so does the dov need forwarding to hmrc as soon as its drafted?

thanks

pawncob
Posts:4639
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: question on deed of variation

Postby pawncob » Fri Dec 30, 2016 12:47 pm

With a pinch of salt take what I say, but don't exceed your RDA

Lee Young
Posts:2694
Joined:Wed Aug 06, 2008 3:26 pm
Contact:

Re: question on deed of variation

Postby Lee Young » Fri Dec 30, 2016 4:24 pm

A dov only needs to be submitted to HMRC is it increases or reduces the IHT in the estate that is being varied. So the answer to your situation is probably no it does not.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

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

Re: question on deed of variation

Postby riccardob » Fri Dec 30, 2016 7:57 pm

thanks.
i have read the manual and it would seem that a letter of intent would constitute a dov providing it mentions certain statements
and is underwritten by all beneficiaries of the estate.
is it obligatory to use a solicitor and does it require witnesses? the doc provided does not mention witnesses.

pawncob
Posts:4639
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: question on deed of variation

Postby pawncob » Fri Dec 30, 2016 9:46 pm

Deeds must be witnessed.
With a pinch of salt take what I say, but don't exceed your RDA

IanDarkwater
Posts:49
Joined:Fri Oct 31, 2008 10:55 am

Re: question on deed of variation

Postby IanDarkwater » Mon Jan 02, 2017 11:55 am

The instrument you are discussing does not need to be a deed; it's just an Instrument of Variation. Only solicitors & similar can write Deed & charge to do so.

There's no set format. You don't need a solicitor or other professional to write it for you tho' I think that you would be daft to write something this important yourself. There are things the IoV should say/contain that you could easily get wrong if you DIY.

It should be witnessed.

You only need the agreement of those beneficiaries who's position is changed by the IoV. Beneficiaries who's position is unchanged don't need to be involved.

If the IoV changes the tax payable of the estate then the executor(s) need to sign the IoV but they can't refuse.

You only need to tell HMRC about the IoV now if the IoV changes the tax position of the estate.

The whole point of an IoV is, FOR TAX PURPOSES, the change is counted as if the will were different. the alternative of a gift of an inheritance by a beneficiary may have Inheritance Tax consequences if the beneficiary dies within 7 years of making the gift.


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