Have you Inherited in the Last 2 Years??

I have been asked a few times recently about inheriting assets and is there anything that can be done to protect those assets?  The answer is Yes, and it is called a Deed of Variation.

Varying the way, the assets are distributed by a Will with a deed of variation can ensure that your new-found wealth is full protected against attachable events such as Divorce or Separation Settlements, Creditors or Bankruptcy Claims, Long Term Care, Further Inheritance Tax Bills (Generational Inheritance Tax) and Marriage after Death.

What is a Deed of Variation?

A deed of variation changes a Will after death and enables the beneficiaries of the deceased’s estate to alter the distribution of the estate or relinquish a bequest from an estate by changing the deceased’s Will.

A Deed of Variation has time restrictions and can only be drafted up to two years after the date of death.

There are many reasons why you might want to consider amending the will of a deceased or even an intestacy.  The main reasons for using a deed of variation are to ensure that the assets and wealth inherited is fully protected against attackable events such as the ones listed above.

Why vary your inheritance into a trust?

If you receive an inheritance direct the assets and wealth site directly in your estate from the moment you receive them making them attachable because you own them.  Using a deed of variation and having those assets transferred into trust within the two years you are fully protecting them from:

• Divorce settlements
• Long term care fees
• Marriage after death
• Creditor claims
• Further taxation

Assets held within a trust will ensure your inheritance is protected whilst still allowing you full access to the assets to use as you wish.

A deed of variation can also ensure that the estate passes on in the most inheritance tax-efficient way.  For example, if the assets pass on to an individual who already has an inheritance tax problem themselves, they could elect to have the assets pass to their children or grandchildren instead, thereby reducing their estate.

In this case, the individual who has foregone the legacy is not deemed to have made the gift but instead, it is the deceased who is deemed to have made the transfer.

It can also be used as a method of absorbing a Capital Gain made on the asset between the date of death and the date of sale.  By transferring ownership of the asset from one beneficiary to several, more capital exemptions can be used, and any gains made on sale are absorbed by the exemption, meaning that there are no capital gains to pay.

How does a Deed of Variation Work?

Each adult beneficiary under a Will or an intestacy estate only has the authority to vary his own share of the estate, but it can apply to any property comprised in the deceased’s estate as long as the person wishing to vary has an interest in that property.

If you would like to learn more about deed or variation or talk to me about any estate planning questions or situations you have, please get in contact direct.  The office number is 01249 704863 or email me at mike@sap-legal.co.uk  or visit the website www.sap-legal.co.uk.