Post-death variations

If you are a beneficiary of an estate there may be a reason why you would want to either disclaim your inheritance or redirect it to another beneficiary.

When you decide to disclaim your inheritance, you waive all influence as to who inherits in your place.

If you vary your inheritance (a Deed of Variation is used for this) you regain the opportunity to choose the recipient and enabling you to carry out some advantageous tax planning.

Deed of Variation

If you give your inheritance to someone and you do not survive seven years, your gift will be added to your estate to calculate the inheritance tax payable on your death.

A Deed of Variation completed within two years of the death to make the same gift can be much more tax efficient, because the seven year survivorship rule will not be in effect and the gift will consequently not be subject to inheritance tax.

We regularly advise beneficiaries of an inheritance on the benefits of completing a Deed of Variation. The redirection of an inheritance could be in favour of the next generation, or it could even be to a trust structure for the benefit of the family as a whole. If an inheritance is redirected to a trust it can be a very useful vehicle to provide a fund for the benefit of the whole family, passing through the generations and - with careful planning – ensure minimum tax being paid on the fund.

With the 2012 introduction of a 4% reduction in the inheritance tax rate if at least 10% of the estate that is chargeable to tax is given to charitable organisations, advice to family beneficiaries on a Deed of Variation to leave more of an estate to charity to benefit from this reduced rate can be invaluable.

Why choose Furley Page for advice about Deeds of Variation

Our team of estate planning, trust and tax advisers can discuss your options to provide the information you need to make the right decision about your inheritance.