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Legal News | 11.07.22

This is my last Will and testament… or is it?

Most people know that making a Will is the best way to ensure that their wishes are followed in the event of their death. What fewer people may know is that it is open to their beneficiaries to vary their Will after their death. If a beneficiary does not want their entitlement under a Will, they can sign a deed of variation redirecting it to one or others of their choosing.

Provided certain conditions are satisfied, the variation will be treated as made by the deceased’s Will for inheritance tax and capital gains tax purposes. These conditions include that the variation is made within two years of the deceased’s death and that the property redirected has not already been the subject of a variation.

The option of a deed of variation can have advantages; consider the following example:

Alison’s Will gives £100,000 to her friend Bradley. Bradley does not need the £100,000 and so decides to give it to his daughter Claire without varying Alison’s Will. If Bradley dies within seven years of giving the £100,000 to Claire, it will be included in his estate for inheritance tax purposes and use up the first part of his available nil rate band (inheritance tax free allowance).

If, instead, Bradley varies Alison’s Will to give the £100,000 to Claire and then Bradley dies within seven years of the variation, provided the conditions are satisfied, the £100,000 will not be included in his estate for inheritance tax purposes. For inheritance tax purposes, it will be treated as though Alison’s Will had always given the £100,000 to Claire.

If you think a deed of variation may be an option for you, please get in touch.

NB. Trust Registration Service
If you are the trustee of a trust, now is the time to check whether you need to be registering the trust with HMRC’s Trust Registration Service (TRS). Following the recent introduction of the 5th Anti-Money Laundering Directive (5MLD), with a few exceptions, all non-taxable express trusts are now required to register. If you are unsure as to whether your trust requires registering, please get in touch as we can help.

If you would like more information on deeds of variation or if you need assistance registering a trust, please get in touch with your usual contact or email the Private Client team at wealth@wansbroughs.com.


Posted By Our Wills, Tax, Trusts & Probate Team