Ellie Holland, Partner in the Private Client Team at the Wilkes Partnership LLP, discusses the recent Government review on the Deeds of Variation open consultation.
In this year’s March Budget, the Chancellor announced a review into Deeds of Variation to ensure they are not being abused from a tax perspective.
Following the end of the consultation process, the conclusion is that nothing will change as far as how Deeds of Variation are implemented although their use is to be monitored.
A Deed of Variation (DV) is a way of changing a Will after someone has died, allowing the beneficiaries of the estate to vary either specifically their entitlement or if all beneficiaries are in agreement the distribution of that estate.
When used effectively, a DV can reduce exposure to Inheritance Tax and channel assets from the estate to those considered more in need, for example grandchildren or charities. Changing the will by variation ensures that transfers from a beneficiary to their child are less likely to become chargeable to IHT under the ‘seven year rule’.
In order to be valid, the DV must be effected within two years of death and all beneficiaries likely to be affected by the changes must agree to them.
We have dealt with a number of cases where the effective use of a DV means that assets can be passed down to generations whilst mitigating the inheritance tax position for the family as a whole.
If you would like to find out more about Deeds of Variation, please contact Ellie Holland of The Wilkes Partnership LLP on firstname.lastname@example.org or 0121 733 8000.