What Is A Deed Of Variation
Poor estate planning can cost you quite a lot because of the inheritance tax. When passing down assets that clear various thresholds for their value you may owe 40% in inheritance tax (IHT). But what if someone told you it’s possible to work around paying the maximum amount in tax with a deed of variation (DOV). Keep reading to find out more:
So, what’s a deed of variation?
A DOV is a legal document that can be used by the beneficiaries of an estate, such as children, to make some changes to the will left behind by the deceased. Making such changes, in the name of the deceased, means that the persons inheriting the property that has been left behind can redirect whatever they are meant to inherit to different parties.
What if there wasn’t a will?
In the event that there isn’t a will in place, the law can be used to divide the estate in a given order. This should be according to the rules of intestacy. Nonetheless, it’s still possible to make some inheritance changes. However, all beneficiaries under the intestacy rules should agree to vary the distribution of the assets.
Are there any time restrictions?
Varying a will is possible before or after obtaining probate. However, you should note that any changes to the will have to be made within two years after the death of the estate’s owner. It’s also important to note that the paperwork has to be signed by all the beneficiaries and executors for it to be valid.
Why would you want to make a variation?
Several reasons account for why trustees or beneficiaries may wish to consider rearranging the disposal of property. The main reasons are as follows:
- Redirect benefits to another person – One of the most common variations is where parents want to pass on their inheritance to their children.
- Saving tax – As a beneficiary, one can take advantage of the Transferable Nil Rate Band which exempts certain individuals from inheritance tax. In such a case, the most common variation would be the passing on of assets to a beneficiary who is exempt from tax.
- Provide for someone who has been omitted – There are times when a beneficiary where people who are supposed to be provided for by the deceased are left out or not sufficiently provided for in a will.
- Clearing up any uncertainty over a will – If there are any defects or uncertainties in a will, a deed of variation can be used when resolving such issues.
Who is capable of making a deed of variation?
Any beneficiary who is over 18 and of sound mental capacity can make a variation under the Intestacy provisions or with respect to any gift in a will. If the variation is supposed to affect children or unborn babies, there has to be a court approval before making a deed of variation.
Thank you for reading this month’s blog. You should now know more about inheritance tax and a deed of variation. If you need expert, friendly advice on inheritance tax, DOV’s, or another aspect of family law give us a call on 01753 889995. Or fill out the enquiry form on our contact page today.