Legal News | 8.06.23
Deeds of Variation: When there’s a Will (and even when there isn’t), there’s always a way…
The current Inheritance Tax (“IHT”) nil rate band stands at £325,000 per person with an additional £175,000 per person if they own property which will pass to their children on their death*. As these nil rate bands can be transferred between spouses, each married couple with children could benefit from a combined £1million nil rate band before inheritance tax is charged on their estates.
If your estate value is approaching or exceeding this limit, and you are due to inherit you might want to consider varying the Will under which you are inheriting.
You can arrange to vary a Will in a way that ensures you do not receive the inheritance and therefore do not augment the value of your estate for IHT purposes. In addition, the diverted inheritance is not treated as a gift from you for inheritance tax purposes. Instead, the gift is treated as though it came from the estate of the deceased. In this way, the 7 year rule that you will have read about in previous newsletters will not apply to the gift.
It should also be noted, that where a person dies without a Will (otherwise known as dying intestate) the rules of intestacy can also be varied in this way.
There is a two year window from the date of death to vary in this way, so please do get in touch with your usual contact at Wansbroughs or email us at wealth@wansbroughs.com if any of the above rings true for you. We would be happy to help.
*Subject to tapers for estates worth more than £2 million.
