Real Life Problems and their solutions – altering a Will

Mr B is 84 and his brother had recently passed away leaving everything to him. It was a sizeable inheritance. Mr B is widower with 2 adult children and several adult grandchildren and he himself had savings and property of considerable value. He was concerned that the money he was to inherit from his brother will have been subject to inheritance tax and that potentially in a short period of time he may die leaving his estate to his children and the inheritance from his brother would therefore essentially be taxed twice at 40%.

The potential of using a Deed of Variation was discussed with him.

Deed of Variation

Sometimes the terms of a Will are not the best use of the assets and it may be beneficial to change the terms by a Deed of Variation.

A deed of variation can be used by any person who receives a gift under a will to redirect their inheritance to another person. This person can be chosen irrespective of whether or not they are named in the will. Changes can be made provided all the beneficiaries agree.

Any changes must be made within two years of the death of the deceased and the paperwork must be signed by all executors and beneficiaries.

Reasons to consider changing the Will:

• Balancing up bequests made to beneficiaries – if, for example, one child was left a smaller percentage than another
• Providing for someone who was left out of the will – such as when a grandparent leaves assets to the oldest grandchild, but does not update their will when another grandchild is born
• Rewriting the distribution of the estate so that it passes on in the most inheritance tax-efficient way – and to minimise capital gains tax liability
• Clearing up any uncertainty over the will.

Mr B did prepare a Deed of Variation and decided to pass the inheritance from his brother onto his grandchildren who were in the process of becoming first time buyers / starting families of their own.