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2015 Budget: Unnecessary Assault on Deeds of Variation?

In the March 2015 Budget address, Chancellor George Osbourne announced there would be a review on the rules of deeds of variation. A report on the findings of the review are to be published this autumn.

Deeds of variation must be made within two years of the death of the testator. The deed amends or alters the terms of a Will. If there is no Will, the deed can amend the rules on inestacy. For example, adult beneficiaries in their 50’s or 60’s whom are financially stable and considering their own inheritance tax position can utilise a deed of variation to redistribute bequests to younger beneficiaries. Not only does this remove sums from their own estate for inheritance tax purposes but it may be that this allows for greater harmony within the family.

For inheritance tax purposes also, the changes under the deed are read back as if in the Will or under the rules of intestacy.

Whilst the Chancellor intimated deeds of variation are used for tax avoidance purposes, the benefits of making a deed go far wider than tax planning. For example, a deed of variation may ensure a widow/widower can stay in their home.

It is worth bearing in mind that over two thirds of people do not have a Will and as such a deed of variation can be a lifeline fo future heirs. A deed can enable an estate to be transferred according to a families’ wish where a Will has not been made or family circumstances have changed.

It is unclear what the result of the government review will bring; a stricter criteria to follow or an abolition of the deed of variation altogether? In light of this uncertainty, we recommend you review your Will and any other post death arrangements you have to ensure they are up to date with taxation and your family circumstances.

If you are considering having the terms of a Will varied following the death of a family member, or you would to like to find out more about deeds of variation please feel free to contact us on 020 8537 3448 or send an email to wills@ashtongrace.co.uk

We recommend you take action sooner rather than later, in light of possible changes to deeds of variation in the future.

Ashton Grace – specialists in Wills & Estate Planning

 

 

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