As part of a drive to claw back £3.1billion lost through tax avoidance, the chancellor George Osborne recently announced a review of Deeds of Variation.
Deeds of Variation enable the beneficiaries of a Will to alter the terms of the Will following somebody’s death, so long as all of the beneficiaries agree to the changes and providing the changes are made within 2 years of death.
Deeds of Variation are a popular tool in inheritance tax planning as beneficiaries can pass the estate to their children in order to reduce their own inheritance tax liability, and place assets into trust so that they do not aggregate with the estate of the beneficiary for inheritance tax purposes.
Deeds of Variation can also be used to provide for somebody who has not been included in a Will or to rectify errors or omissions in a person’s Will, in order to avoid family disputes. This is particularly helpful if a Will is poorly drafted or out of date.
The consultation is due to be completed by the autumn but the announcement leaves us with uncertainty which means that now is a good time to consider your Will. If Deeds of Variation are disallowed, families may have no option but to make do with an unsatisfactory Will.
You should review your Will regularly to ensure it is up to date and tax efficient. At Napthens we offer a free five year Will review service in order to assist clients in keeping their Wills current.
Feel free to contact a member of the Napthens’ estate planning team to discuss your inheritance tax planning requirements. Call 0345 671 0276 to arrange an appointment.