For many people a deed of variation can be a very important part of planning ways to pass on an estate in a tax efficient way. It has the effect of being able to vary a will within two years of death as if the deceased person had written it.
Mr H was a wealthy man with assets of around £2M, mainly in property. When his Mother passed away she left him £120,000. He needed the income yet did not really want to increase his assets by a further £120,000. It would have added a further £48,000 of tax on his death.
Mr HG asked his solicitor to effect a deed of variation. This meant that he waived his right to £120,000 and effectively the will was re-written so that His Mother left the sum of £120,000 into a discretionary trust for Mr HG and his 3 children. The trustees had discretion to make payments to Mr HG during his life time. The trustees paid him a regular income of £5,000 per annum.
The net result of his action was that Mr HG had an income and upon his death the capital sum would go down to the next generation.This note is based on Hart Greaves understanding and should not be acted upon without first taking advice from a competent solicitor. Please call us for further information
A FULL AND COMPREHENSIVE MEETING NEEDS TO BE CARRIED OUT AND FULL FACTS OBTAINED ABOUT AN INDIVIDUAL’S CIRCUMSTANCES IS UNDERTAKEN BEFORE ANY RECCOMENDATION IS MADE. THIS EXAMPLE IS NOT A RECCOMENDATION.