The distribution of an Estate may be varied at any time during the administration period. There are a number of reasons why beneficiaries may wish to consider this including:
- To enable more efficient tax planning – often for Inheritance Tax (IHT) purposes.
- To include charitable giving
- To correct an error contained in the Will
- To compromise a potential claim against an Estate
The desire to mitigate IHT’s is often a driver behind a Deed of Variation and to be effective for this purpose the Deed must be executed within two years of the date of death and must be for “no consideration” in other words those relinquishing entitlement under the Estate must receive no “compensating” benefit.
All parties who are affected by the proposed variation (not therefore necessarily all the beneficiaries) must be a party to and agree the Deed. The variation must be formally recorded in writing.
Because the underlying purpose of a Deed of Variation is often to save IHT the Inland Revenue (Capital Taxes Office) will often investigate those carefully to ensure first that procedural requirements have been met and secondly, that the proposed arrangement is not a “sham” and in consequence in-effective.
We are able to advise Executors and Beneficiaries as to Deeds of Variation and in relation to
- Devising schemes of variation to assist beneficiaries for the purpose of mitigating Inheritance or Capital Gains Tax.
- Devising schemes of variation to assist in resolving contested probate actions
- Drafting and implementing Deeds of Variation.