Deed of Variation, Will & Inheritence Tax - Advice please

Thread in 'Other Chat' started by hachihead, Jan 15, 2015.

  1. hachihead

    hachihead Member

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    First post in a long time here but thought people on here might have some experience in this.

    My GF is involved in the whole probate, inheritance thing after the death of her father and is facing an inheritance tax bill.

    Her fathers wife has been told to do a deed of variation and then "gift" back the property which has passed down through the will as this will avoid inheritence tax.

    Does anyone have any experience in this??

    What are the risks? Tax evasion? The wife not giving the property back if things went sour?

    Any advice would be greatly appreciated.

    Thanks in advance.
     
  2. brian_s

    brian_s Member

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    Best to speak to a solicitor .....
     
  3. Hazzles

    Hazzles Member

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    It all depends on what the Will says. Usually the estate passes freely to the spouse, so I'm guessing that instead the will says the property should pass down to your gf? There are lots of different factors to take into account but generally you can't just gift the property without risking IHT, unless: the donor lives for seven years after the gift was made/a special type of trust is set up/the nil rate band covers it.

    Who told her to go down this route? This is a potential minefield, you need to speak to a financial adviser to go about this most efficiently.
     
  4. hachihead

    hachihead Member

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    Yes, she spoke to a solicitor yesterday, and is meeting to discuss it today and going back to solicitor tomorrow.

    A solicitor(friend) spoke to the wife and indicated this would be a way around the IHT bill which is a fair amount of money.

    If it can be done easily and legitimately I don't see the harm but when it crosses into grey areas tax is the last thing you want to be investigated for should that kind of thing arise.

    Just wanted to see if anyone on here had dealt with it. Has nothing to do with me but she called me for advice yesterday and I didn't know anything about it.
     
  5. kieran_e1

    kieran_e1 In need of practice

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    a deed pf variation is a common enough process so no issues there. there are other issues though which need to be considered that are dependant on the value of the property being gifted. if it itself is more than the IHT allowance then there could be an immediate liability for the beneficiary albeit at 20% instead of 40%.

    also you must then consider whether it is an outright gift or a gift with reservation as this can impact on other things such as long term care provision is needed in the future

    Was there a will?
     

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