Avoiding inheritance tax, legally and ethically: deed of variation

Avoiding inheritance tax, legally and ethically: deed of variation

One hot topic which has been in the press in recent months is how some estate can reduce the inheritance tax (IHT) payable on death by changing the Will after death through a Deed of Variation (DOV). Ed Miliband’s family, among other UK politicians’, used a DOV to change the outcome of a family Will so that it was more economically viable. This is not tax evasion: it is simply shrewd tax planning, and the government has no plans to consider this legal arrangement in any other light.

So when can you use a DOV to make things easier after a loved one passes away?

The best advice is to make these changes before death: the testator really should keep a regular review of their Will to ensure it is tax-efficient and fit for purpose. It is much easier than trying to chop and change their wishes after they have passed away.

But if it has been left too late, there are times when the executors of a Will (or even administrators in an intestate estate, where there is no Will) can make these important changes. You would need to seek the advice of a professional, such as SWW Trust Corporation, because this cannot be done without legal assistance.

As long as the changes are made within two years of death, they will be treated for IHT purposes as though they were incorporated into the original Will: as such enormous tax bills can be avoided legally and ethically by swift and prudent advice from SWW Trust Corporation.

It requires the consent of the beneficiaries affected by the change: so if anyone disagrees with the changes, or if they are minors and are too young to make the decision, or lack capacity, it may not be possible to proceed.

If we are administering to the estate, SWW Trust Corporation can give even more accurate expert advice on how the DOV can best be used, and can help to further reduce the stress and confusion of tax liabilities after the loss of a loved one.


James Greenwood-Reeves

Estate Case Manager

SWW Trust Corporation

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