Deed of Variation Query

[CreativeAccounting]

I understand that you can make provision for another party from an inheritance through a deed of variation. How do you do this If the inheritance is a property which is destined to be sold? Can you specify that a set amount of money from the sale, or, alternatively, a percentage of the proceeds from the sale are to go to the other party?

DoVs are fairly straightforward but they depend on the wording of the will and more importantly who the beneficiaries are. Children or vulnerable adults cannot agree to a DoV so if the proposal would mean they were worse off as a result, it can’t go through.

A deed of variation effectively re-writes a will (or intestacy), usually but not always for tax purposes.

What is it your'e trying to acheive?

@Bromptotoo I am the sole beneficiary of a family member’s will. I will inherit a property once probate is granted. I would like to make provision for a third party who was the deceased’s carer and partner. I believe the deceased would have made this provision themselves had they been able to. (The deceased was not of sound mind during her last years and there was a POA in place).

You need proper legal advice, ideally from a STEP solicitor. To answer your specific question I personally would go with a % of the property if you can’t wait for the property to be sold.

I am going to suggest one option to consider/discuss with the solicitor, you could give the partner a life time interest rather than handing over a lump sum. This could be used to buy them a property and/or provide an income for the rest of their life, but revert back to you or your heirs on their death.

Thank you. I will take advice.

"I would like to make provision for a third party who was the deceased’s carer and partner."

There is nothing stopping you simply gifting however much you wish to, to the carer, after you receive the money. It's your money and you can do what you like with it.

The only consideration will be if you die within seven years of giving this gift to the carer and your estate (including this gift) is subject to Inheritance Tax (IHT), (typically more than £500k if you're single or more than £1 million if you're married and your spouse has already died and left everything to you).

If you die within seven years then any gift is counted as still belonging to your estate for IHT purposes.

So, if you are concerned that you may die within seven years, and you are giving this person a substantial gift, then a Deed of Variation would be appropriate. This must be done within two years of the death of the person concerned.

You can choose exactly how much you wish to give in a Deed of Variation.

[EDIT]

Just saw the previous post. Yes, this is a good idea as well, to give the carer a life interest in the home if that would be better than selling the home and forcing them to move out.

The only issue there is that you would be faced with a Capital Gains Tax bill when you eventually come to sell the house as you have not lived there yourself.

Thank you. The third party has a home of their own so will not need a life interest in the deceased’s property. Because my own health is precarious, a deed of variation is the answer I think.

My family did a DoV. Put house in 1 siblings name instead of 3. All siblings agreed. No problem.

IANAL but I believe there is quite a long period to make a DOV after the death.