One would be forgiven for thinking that when a deceased person’s will dictates that their estate is to be administered and their assets distributed in a certain way then that is the end of the story. But this does not necessarily need to be the case with a legal document called a Deed of Variation.
A Deed of Variation allows the beneficiaries of an estate to alter the terms of a will so that all those involved are optimally provided for. There is often a need for such changes in light of the beneficiaries’ circumstances having altered after the will was made. Or, it might simply be the case that tax optimisation wasn’t sufficiently attended to at the time.
At the more practical end of things, a Deed of Variation might see some of the bequeathed assets being placed in trust in order to protect vulnerable or young beneficiaries. However, it is also possible to deploy a Deed of Variation to garner very significant tax savings
At the more practical end of things, a Deed of Variation might see some of the bequeathed assets being placed in trust in order to protect vulnerable or young beneficiaries. However, it is also possible to deploy a Deed of Variation to garner very significant tax savings. You could, for instance, ring-fence assets from future Inheritance Tax charges by placing them in trust; you might even opt to gift 10% or more of the net estate to charity, and potentially benefit from a lower IHT rate as a result. Those are just a few examples of how reallocating bequests can be beneficial; Deeds of Variation can be an extremely useful tool in multi-generational wealth planning.
It goes without saying, however, that Deeds of Variation and associated vehicles like trusts are exceptionally complex areas which call for both expert wealth management and legal advice. The executors of the estate and all parties concerned will also need to be in agreement, which is another vital way that having objective professionals leading the discussions can help.
Deeds of Variation are just one among a range of perhaps little known but highly valuable tools which wealth management experts have in their estate planning and succession kits. The tax efficiencies Deeds of Variations can achieve in combination with trusts are worth any wealthy family exploring when the time arises.
These are deep waters, however, and it is vital to use real experts to deploy Deeds of Variation, trusts and gifts. If you would like to explore your options for receiving high-value, low-hassle advice, get in touch to learn more from our expert team.