Variation of Will

[Manthide]

My db died last week, only a short time after he learned that he was terminally ill. He wanted to make things easier for our parents so decided to make a will. He was unmarried, childless and long term unemployed due to a bad accident though the powers to be had decided he was fit to work.
Anyway he initially wanted to leave me, his only sibling everything but I asked him to leave it to our parents as I am divorced ( ex dh still lives with me and refuses to do a financial settlement - he is also unemployed) and we are on universal credit. I work about 30 hours a week but that varies as it's a zero hour contract. One dc is still at school and we also have 3 adult dc. I thought it would complicate matters. I am 8 years from retirement.
He wasn't really well enough to make anything but a basic will and he only signed it a week before his death. Db had a small terrace house and I'm not really sure as we don't know the value of his private pension but his estate will probably be in the region of £300k.
Obviously we would so much rather he was still with us but dm is talking about giving me and my 4dc money from the estate after probate is granted. I'm just a bit worried that this might end up as part of their estate if they don't survive 7 years. They are in their 80s and I don't know but I would imagine their estate would be about £700k without db's. I was wondering if it would be wise to do a variation of the will to divide the monies equally between my parents and my 4dc. My parents do not have a will.
Sorry for the long winded post, just wanted some advice.

First of all, is his latest will correctly witnessed? does it say the previous will is revoked?
If the will has you down as a beneficiary and you are in receipt of benefits, you cant just change the will as it would be considered as deprivation of assets.

Your parents should make a will regardless of this situation.

If your parents are happy to make a deed of variation, so that your brothers estate goes to your children (if your youngest is not 18 there would need to be a trust for their share) they should consult a solicitor.

There is no problem in you being bypassed, as it were.

This is the only Will he ever made. I was never named as a beneficiary except as a residual beneficiary if my mother or father died within 30 days of his death.

Dd3 is 16 so would need a trust which would complicate matters. Both dd1 and dd2 are married with dc and have good jobs. Dd2 has recently bought a new home for over £1.5 million. Ds is at university.

Db was younger than me and the illness was very sudden and unexpected. We are from a working class family and have never has to deal with probate or potential IHT before.

I am sorry for your loss. I should have said that in my first message.
It's a lot to have to think about and deal with, particularly if you weren't expecting it.
A solicitor will be able to advise about a trust etc.

You are correct that if your parents die within 7 years of making you a gift then it will be brought back into account for iht purposes and use up part of their tax free allowance. Depending on values this could increase iht payable on their deaths. Your parents should consider benefiting you and your children through a deed of variation. It is important to remember this must be completed within 2 years of the death. They should take advice from a STEP qualified specialist solicitor. They should consider benefiting you and your children via a discretionary trust. As no one beneficiary is ‘entitled’ to anything from trust (just a right to be considered by trustees) it can assist with ring fencing funds on a divorce (although not bomb proof) particularly if there is evidence of others beneficiaries receiving funds from the trust. Funds could also be loaned rather than transferred out of the trust. The trustees could determine the extent of benefit for grand children and the appropriate time for them to receive funds. Choice of trustees important. Potentially you and your parents? Maybe a professional (solicitor).

Your parents also need to do a Will for themselves asap. Also consider discretionary trust for this.

I am so sorry you have lost your brother.

Your parents can leave up to £1m between them to you without incurring IHT.
An allowance of £325k each (which carries over to the survivor when one goes) and an additional £175k each if they leave their house to a direct descendant. (You, or grandchildren)

They can give away £3k each year as a gift without it being considered for IHT.

If they gave more, yes it would be added to the estate for IHT (If the total value of the estate is worth more than £1m as above) if they died within 7 years BUT the amount added decreases pro rata per year. And if they hadn’t given it away it would be within their estate anyway.

Could they buy a house which is theirs, but for you to live in? There may be things I haven’t thought of and not sure whether you own or rent atm, but it would free you from ex, mean you benefit from your brother’s will as he intended, and in due course your parents could give you the property.

Thank you for your advice. I do have a good relationship generally with my parents but they don't know we are divorced- my dc do. Dm is very judgemental and religious and it has never been a good time.
We own our house outright but it is in bad condition eg the roof leaks, there is a hole in the bedroom ceiling, we can't open the garage door etc and everything is very old eg the settee is over 30 years old and broken, all the beds and mattresses are over 20 years old. Dm wants to help repair the house, I have saved up money for the roof but I don't really want to up the value of the house.
Ex dh is not English and both his parents have died within the last 3 years. He never went back for either of their funerals. He does not have a passport and though he has lived here for over 25 years ( probably 30+ altogether) he does not want to become a British citizen. I have no idea if or what he inherited as the only ds - he has one sister. They were comfortable but had been in care homes. In the past they had accounts for our 4dc and when the older 2 dc became adults they were given about £10k each. The younger 2 have had nothing which seems strange as they were not like that. His sister has authority to act for him.
We will need to take legal advice. Ex dh has no pension as he drew it all down and neither do I as I was a SAHM for years or worked part time on minimal wage. I do have enough credits for a full state pension.