A Deed of Variation is a useful tool which enables your estate (by agreement) to change the contents of your Will after you have passed away.
It is difficult to predict the exact value of your estate and therefore if any Inheritance Tax is payable after you die.
A Deed of Variation could be used to reduce your Inheritance Tax liability by changing your Will within 2 years of your date of death if there is a more tax efficient way of disposing of your assets for the best interest of your beneficiaries.
HMRC have provided a checklist to follow when creating Deed’s of Variation.
A Deed of Variation doesn’t re-write your Will but it does change its contents. This may be required to:
- Resolve any uncertainty in the Will.
- Equalise distributions between the beneficiaries.
- Include beneficiaries such as grand-children that were born after the Will was created.
- Include someone who is excluded in the rules of Intestacy, such an unmarried partner or a step-child.
How can it reduce IHT?
A Deed of Variation can be used to include a donation to charity in the Will.
When a gift to charity is made, this is taken into consideration when calculating how much IHT is payable on the estate. Your donation will either:
- Be taken off the value of your estate before IHT is calculated; or
- Reduce your Inheritance Tax rate to 36% (from the normal 40%), if 10% or more of your estate is left to charity.
This means the donation could reduce the rate which your estate is charged Inheritance Tax. The reduced rate of tax may be more of a saving to your estate than the donation.
A Deed of Variation can be created before or after applying for the Grant of Probate but they must be made within 2 years from the date of death.
For more information contact Newnham & Jordan Solicitors today on 01202 877 400 to enquire about our Probate services.
- We offer confidential appointments in person or by Zoom.
- You are also welcome to email us at: privateclient@Newnham-Jordan.co.uk.
This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Newnham & Jordan Solicitors, in Wimborne Dorset, cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.