George Hay Chartered Accountants were one of the first accountancy firms in the country to obtain a licence to carry out non-contentious probate work. In our monthly column, we give you an insight into the process and provide an update on what is happening in the world of probate and estates.
We have been working, this month, on arranging for a Deed of Variation (D of V) for an Estate we are administering.
A D of V is where some or all of the beneficiaries agree to re-write a person’s Will after they have died.
Some people do not approve of this, mainly on moral grounds, believing that the wishes of the deceased should be honoured. The main reason that it is allowed is that, when somebody writes a Will, they of course do not know when they are going to die.
The principle behind the D of V is that the beneficiaries can assess their financial situation and other needs at the time of death of the giver.
For example, a mother might die in her 90’s leaving all her assets to her children. Her children could easily be aged 60+ and have no need of the legacy. If they were to receive the money and then gift it to their children, this would count as a lifetime gift by them and should the parent die within seven years, an Inheritance Tax liability may arise.
The D of V enables the Will to be re-written for example that, “mum” leaves all of her assets to her grandchildren.
Another example could be that the deceased did not take tax advice and the Will is a tax disaster. Consequently, the beneficiaries can often re-write the Will to make it more tax efficient.
This has become more important in recent years with the introduction of the Residential Nil Rate Band, given that tax refunds can be obtained by leaving a private residence to a linear descendent.
This relief was only introduced in 2017 and many people dying would have had their Will signed before then and could be missing out on a relief.
The main rules are: –
- The D of V must be signed within 2 years of death.
- All beneficiaries giving up or amending their inheritance must agree.
- No beneficiaries should be paid for entering into the D of V.
- A legacy to somebody aged under 18 cannot be varied.
- You can only do one D of V for each asset; you cannot change your mind afterwards.
Perhaps bizarrely, you are allowed to prepare a D of V for somebody who died without leaving a Will and, in this case, the intestacy provisions are deemed to be the original Will.
At GH Probate, we always discuss with our clients whether or not a D of V can be of benefit when administering an Estate.
To discuss your requirements with one of our discreet, expert probate practitioners, contact Huntingdon-based Barry Jefferd on 01480 426500, or you can email us at probate@georgehay.co.uk where your enquiry will be dealt with by one of the team.
Authored by Director of GH Probate Ltd., Barry Jefferd.
Our Probate service is provided through GH Probate Limited. GH Probate is the trading style of GH Probate Limited. Registered in England and Wales number 9630102. Registered Office: St George’s House, George Street, Huntingdon, Cambridgeshire PE29 3GH.
Authorised to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England & Wales.
