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Jo C.
Jo C., Barrister
Category: Law
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Experience:  Over 5 years in practice
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Hi I have a situation where I am the excecutor of a will of

Resolved Question:

Hi I have a situation where I am the excecutor of a will of which 95% of the monies go to me and the other 5% to my 2 children. Is it possible for me to split the estate 331/3 % each with no tax liabilities to my children ??
Submitted: 3 years ago.
Category: Law
Expert:  Jo C. replied 3 years ago.
Hi.

Thank you for your question. My name is XXXXX XXXXX I will try to help with this.

Do you mean do a deed of variation so that your share carries the full IHT liability?
Customer: replied 3 years ago.

I guess what I am trying to say is can I change the will so instead of the split being 95% for me and 5% for my sons we all get 33 1/3 % and my sons have no tax liability as it's money from a will under the IHT limit

Expert:  Jo C. replied 3 years ago.
Thanks.

I thought that was what you were getting at. However it doesn’t work like that.

If the value of the estate is over the inheritance tax threshold, inheritance tax is paid on the value of the excess of the whole value of the estate, not on the individual shares.

So the amount of tax paid by the estate is not dependent on who gets what.

You may want to execute a deed of variation, so that the bequest doesn’t go into your estate , but into your children’s so when you die there is no inheritance tax, or at least it is reduced

Does that answer your question or have I misunderstood?

Jo
Customer: replied 3 years ago.

The inheritance is below IHT level say £200k so I understand that I could set up a deed of variation within 2 years and there would no tax liability for my sons

Expert:  Jo C. replied 3 years ago.
I don't understand what tax liability you are talking about if the estate of your mother is under £200,000 as there is no inheritance tax payable by the estate anyway.

What tax liability are you thinking of in particular?
Customer: replied 3 years ago.

If I set up a deed of variation within two years that means I can change the will so we each get 33 1/3% and it will not be treated as a gift to my boys from me but a legitimate inheritance That's my point !!

Expert:  Jo C. replied 3 years ago.
Thank you.
You want to mitigate inheritance tax on your estate payable after your death, not your mother's death.

Of course you can do that, but do remember that any gifts are potentially exempt transfers anyway which are no longer liable to 7 years in any event.

Sometimes, a deed of variation is called a Post Death variation.

It is relatively easy to do and is something that the executor deals with.

Alternatively, you might want to get a solicitor to draft the deed for you which should cost under £100
Jo C., Barrister
Category: Law
Satisfied Customers: 69790
Experience: Over 5 years in practice
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