What Could a Deed of Variation Do For You?
What could a Deed of Variation do for you?
A Deed of Variation is a legal document which allows a Beneficiary who receives a gift under a Will or under the intestacy rules to redirect their inheritance to someone else.
If you inherit a property or a large sum of money you may not know what to do with it as the possibilities will seem endless. If you already have substantial savings or your own home and do not need the additional money, you can use a Deed of Variation if you want someone else to benefit from your inheritance. You may want to ensure all of the Beneficiaries inherit equally, provide for someone who was left out of the Will or was not included under the rules of intestacy such as a partner or a step-child, or provide a deposit for a house or a new car for your children or grandchildren.
A Deed of Variation may also be useful to reduce how much inheritance tax (IHT) is payable on the estate of the person who has passed away. Everyone benefits from an IHT Nil Rate Band, currently £325,000, which is how much an estate can be worth before IHT at a rate of 40% is due on the amount over this threshold. You can reduce the amount of IHT by donating your inheritance to a charity, using it to set up a discretionary trust, or claiming the Residence Nil Rate Band by redirecting the property of the person who has passed away to their children or grandchildren.
The Deed of Variation must be signed by all Executors and the affected Beneficiaries within two years of the person’s death.
To discuss any of the issues raised above, please contact a member of the Private Client team on 01384 410410.