In the Telegraph: “I rewrote my dad’s will to wipe out £400k inheritance tax bill”

There’s an article in the Telegraph today about Peter Hollick, who says he ‘Rewrote his dad’s Will to wipe out a £400,000 inheritance tax liability’. It sounds great, but before anyone gets too excited, I should explain that what Mr Hollick did was to put in place a Deed of Variation to vary his late father’s Will, in order to leave assets that he would otherwise have received himself to a trust for the benefit of his children or grandchildren.

What is far from clear from the article is that the eye-catching headline inheritance tax saving resulted from the fact that the assets therefore skipped a generation, preventing them being charged to inheritance tax at 40% (a) on his father’s death and (b) on Mr Hollick’s own death (Mr Hollick himself being no spring chicken). ‘Quick succession relief’ would in fact apply to mitigate a double charge to inheritance tax if they died within 5 years of one another, however.

Crucially, a Deed of Variation must be made within 2 years of the person’s death, and it must be signed by anyone who is giving up an entitlement under the Will. A Will cannot be varied if there are beneficiaries who would be giving something up but cannot legally consent to the variation, such as existing or as yet unborn children. Once a Deed of Variation is put in place, the Will is read as if the terms of the variation had been included in it originally, and the terms of the variation are also read back into the Will for inheritance tax and capital gains tax purposes.

https://www.telegraph.co.uk/tax/inheritance/rewrote-dads-will-wipe-400k-inheritance-tax-bill/

If you would like to discuss making your Will, please contact us.

http://www.chilternwills.com

Comments are closed.

WordPress.com.

Up ↑

Call us now