Variation of Will

[SomeoneElse]

My wife is due to inherit a substantial sum from a deceased relative. We have obtained a copy of the will from the probate office.

I have some past experience of dealing with a few estates and understand that a will can be varied in order to pass some of a beneficiary’s inheritance to others not mentioned in the will rather than give them the money directly as a gift, in order to avoid the risk of any future IHT under the 7 year rule, should the beneficiary not survive seven years.

My wife and I wish to share the inheritance with our daughters, who will one day inherit from us (but hopefully not too soon).

I have read the Gov.UK variation check list and there’s no effect on IHT or other beneficiaries. I understand that my wife only need write a signed statement clarifying how and to whom her share should be divided. The executor is the deceased’s solicitor.

I can’t find any clarification on how the variation is recorded for the future i.e. if our daughters receive a share of the inheritance and we don’t survive 7 years, how do they then prove that the money received wasn’t a direct gift from my wife? It appears that the statement or deed of variation isn’t sent to HMRC nor any other official body, so is it just a case of attaching a copy of the variation to our wills?

If so, would the statement need to be counter signed by the executor?

What if, say, I was a beneficiary and sole executor, would I simply send myself a signed variation statement and attach that to my will or would I need someone else to counter sign (and who)?

Any advice gratefully received.

[swill453]

so is it just a case of attaching a copy of the variation to our wills?

Yes.

If so, would the statement need to be counter signed by the executor?

No. In fact there's no requirement for the executor to even know about it (as long as it doesn't affect the IHT on the original will).

Scott.

[swill453]

I understand that my wife only need write a signed statement clarifying how and to whom her share should be divided.

It also needs the specific phrase "I intend that the provisions of section 142(1) of the Inheritance Tax Act 1984 shall apply to this variation.".

Scott.

[SomeoneElse]

Many thanks Scott.

So in a nutshell, the solicitor doesn't need to be involved, all my wife has to do is write a signed statement including the specific phrase you mentioned, and when she receives the inheritance she just transfers the relevant amounts to our daughters. So, basically, a gift with the addition of the signed statement.
Does the variation statement need the signature of a witness? Doesn't sound like it, but just checking.
Thanks again,
Don

[swill453]

So in a nutshell, the solicitor doesn't need to be involved, all my wife has to do is write a signed statement including the specific phrase you mentioned, and when she receives the inheritance she just transfers the relevant amounts to our daughters. So, basically, a gift with the addition of the signed statement.
Does the variation statement need the signature of a witness? Doesn't sound like it, but just checking.

Yes that's it in a nutshell. As long as your wife's executor in the future has the DoV to explain the movement of the money. No witness required, though it wouldn't invalidate it if you had one.

EDIT: Of course I am not a solicitor. The above is what my father has done with an inheritance.

Scott.

[Dod101]

That is very interesting and much less complicated than a Deed of Variation of the Will. It is not a variation of the Will at all, it is in fact a variation of a disposition of the Will and does not involve the Executor in any way if I am reading all of this correctly.

Unlikely to affect me one way or the other but interesting to know.

Dod

[pje16]

get this form (which I used when I had to do one)
https://www.gov.uk/government/publicati ... klist-iov2

[swill453]

That is very interesting and much less complicated than a Deed of Variation of the Will. It is not a variation of the Will at all, it is in fact a variation of a disposition of the Will and does not involve the Executor in any way if I am reading all of this correctly.

Unlikely to affect me one way or the other but interesting to know.

It absolutely is a Deed of Variation, which doesn't have to be complicated. It follows the checklist referred to in the OP, and linked to later in in thread.

Scott.

[scrumpyjack]

It does not even need to be a Deed but can simply be a letter of variation. But it is important to get the wording correct. Also bear in mind that it must be done within 2 years of death and that any income on the assets 'varied' up to the point the variation is made is still yours. If it involves assets other than cash (eg shares or property) it must include the appropriate note about CGT so that the revised beneficiaries get those assets at probate value. You can find all this stuff online.

[Dod101]

That is very interesting and much less complicated than a Deed of Variation of the Will. It is not a variation of the Will at all, it is in fact a variation of a disposition of the Will and does not involve the Executor in any way if I am reading all of this correctly.

Unlikely to affect me one way or the other but interesting to know.

It absolutely is a Deed of Variation, which doesn't have to be complicated. It follows the checklist referred to in the OP, and linked to later in in thread.

Scott.

Scrumpyjack tells us that it need not be a Deed. That is a technical point aside from the point I was trying to make that it is as I said nothing directly to do with the Will and does not need other beneficiaries or the Executor to be involved. It is a variation of a disposition of the Will, one step removed if you like. That is all that I was saying but I think it is important .

Dod

[swill453]

Scrumpyjack tells us that it need not be a Deed. That is a technical point aside from the point I was trying to make that it is as I said nothing directly to do with the Will and does not need other beneficiaries or the Executor to be involved. It is a variation of a disposition of the Will, one step removed if you like. That is all that I was saying but I think it is important .

The letter simply is the Deed of Variation. It becomes so by following the checklist. Your "nothing directly to do with the Will and does not need other beneficiaries or the Executor to be involved" defines the circumstances of a Deed of Variation.

Scott.

[scrumpyjack]

This is the HMRC web page about it, saying that it does not need to be a formal document or deed and laying out the conditions.

https://www.gov.uk/alter-a-will-after-a-death

[pje16]

I just did a letter
I have removed the personal details but it was based on this

This Deed of Variation is made on 7 of December 2021
We,
Enter names and addresses of beneficiaries affected

Explain the variation

The parties to this variation intend at the provisions of section 142(I) of the Inheritance Taxes Act 1984 and section 62(6) of the Taxation of Capital Gains Act 1992 shall apply.

Signed by Beneficiaries

xxxxxx

Date
Witness (name, address, signature, date)

[swill453]

This is the HMRC web page about it, saying that it does not need to be a formal document or deed and laying out the conditions.

https://www.gov.uk/alter-a-will-after-a-death

OK, they call it an "instrument" of variation. No point getting hung up over a word, it doesn't affect the advice to the OP.

Scott.

[swill453]

The one in my family is:

Deed of Variation

This deed varies the will of [name] of [address] who died on [date].

The entire inheritance that the will leaves to me shall instead [blah blah]

I intend that the provisions of section 142(1) of the Inheritance Tax Act 1984 shall apply to this variation.

Signed Date

(no property involved)

Scott.

[SomeoneElse]

Oh, what have I started?!
All very helpful. I have read and checked the IOV2 & notes but they only tell half the story, not actually how to do it. No effect on IHT or other beneficiaries. No CGT, no mention of any investments etc. so if there were any they're being cashed in.
So, in effect, a signed statement is a deed.
As for the 2 year rule, what's to stop someone backdating a variation statement if an unexpected inheritance arrives after two years and only they need to sign it? We don't need to know the exact amount as the intention is to divide it equally, so can easily write one now. Of course, it can be re-written when the exact amount is known.
I'll check the HMRC website (thanks Scrumpyjack!)

[swill453]

Oh, what have I started?!
All very helpful. I have read and checked the IOV2 & notes but they only tell half the story, not actually how to do it. No effect on IHT or other beneficiaries. No CGT, no mention of any investments etc. so if there were any they're being cashed in.
So, in effect, a signed statement is a deed.
As for the 2 year rule, what's to stop someone backdating a variation statement if an unexpected inheritance arrives after two years and only they need to sign it? We don't need to know the exact amount as the intention is to divide it equally, so can easily write one now. Of course, it can be re-written when the exact amount is known.
I'll check the HMRC website (thanks Scrumpyjack!)

It doesn't need to specify exact amounts. Ours says "all of it in equal shares to ...".

Changing it or signing it retrospectively would be opening can of worms, possibly leading to tax evasion investigation if discovered.

Scott.

[SomeoneElse]

I was just thinking that if it was better to state the specific amounts then she could date it at the time she receives the inheritance or do it now in advance with "shared equally" just in case it came after 2 years and couldn't then specify the exact amounts (for the reasons you've given). I also meant that if no-one else has to sign, how would anyone know if the statement was backdated if the amounts weren't stated ( just hypothetical)

[swill453]

I also meant that if no-one else has to sign, how would anyone know if the statement was backdated if the amounts weren't stated ( just hypothetical)

Further down the line, her executor may have to (effectively) assert that they have seen a valid variation of the will. If they know that's not the case then they are knowingly perjuring themselves (not sure if "perjury" is the correct word, but something similar anyway).

As you deduce, the chance of anyone finding out is minimal, but why take the risk if it's not necessary?

Scott.

[Dod101]

Scrumpyjack tells us that it need not be a Deed. That is a technical point aside from the point I was trying to make that it is as I said nothing directly to do with the Will and does not need other beneficiaries or the Executor to be involved. It is a variation of a disposition of the Will, one step removed if you like. That is all that I was saying but I think it is important .

The letter simply is the Deed of Variation. It becomes so by following the checklist. Your "nothing directly to do with the Will and does not need other beneficiaries or the Executor to be involved" defines the circumstances of a Deed of Variation.

Scott.

Why are you being so obtuse? In my experience a Deed of Variation is usually referring to an agreed change to the terms of a Will. It is a rather more complicated business than the change in the disposition of a legacy by a beneficiary of a Will using Section 142(1) of the Inheritance Act 1984.

If you want to stick to what you are saying and me to what I say, there is nothing more to be said. We are both correct as long as we know what we mean by a Deed of Variation.

Dod