UK families are being urged to consider the benefits of setting up a deed of variation (DOV), which may be able to help families to resolve difficult Inheritance Tax (IHT) issues after the death of a loved one.
If a person has set up a Will prior to their death, a DOV can effectively enable the beneficiaries of the deceased’s estate to ‘make changes’ to this Will after they have passed away – which, in some scenarios, could save families a lot of money in IHT.
This is because, in instances where IHT is due, a DOV can help families to redirect money to other beneficiaries in such a way which might reduce, or perhaps even eliminate, the amount of tax owed.
This can prove invaluable in cases where the deceased has not structured their Will in a tax-efficient way, or has failed to consider the IHT implications of passing on their estate in line with their initial wishes.
Many people make these kinds of mistakes, as they are unaware that any estates valued at £325,000 or more will usually attract IHT at a rate of 40 per cent, unless specialist IHT planning advice has been sought.
A DOV can be set up within 24 months of a death, assuming all executors and beneficiaries of the Will are able to meet together and sign the document in order to validate it.
However, the rules governing DOVs, Wills and IHT are complex and confusing, which is why families should always seek specialist legal advice in this area.