It seems that no budget is complete without the proposal of reforms around inheritance tax. On Wednesday, the Chancellor used his budget to announce a review of the use of deeds of variation.
A deed of variation enables a beneficiary to rearrange or redirect the interest that came to him or her originally from the deceased’s will, or the intestacy provisions where there is no will. There are a number of reasons why a deed of variation may be appropriate to use after someone’s death. Where there is no will, they can ensure that the estate passes as the deceased intended. In other cases, a deed of variation may be used to mitigate inheritance tax (immediately or for future generations).
And, of course, it is the use as a tax mitigation tool which is concerning Mr Osborne. He said that the Treasury would conduct a review on the “avoidance of inheritance tax through the use of deeds of variation”. So, what if deeds of variation were no longer available as a tax mitigation tool? Many more families will pay inheritance tax, which could have been avoided had the deceased made a will or recently updated their will.
Given that around 60% of people do not have a will and, of those who do, nearly 70% have not reviewed their wills in the past five years, it is foreseeable that the Treasury will recommend ways to close this perceived loophole and generate more cash for the coffers. The answer is to ensure that you have a will or have updated your will if it is more than five years old.
At Rubric, as private client specialists, we offer a bespoke and comprehensive will writing service. Our experience includes preparing all types of wills, from the most straightforward to those involving complex trusts. We also advise on inheritance tax. We offer all clients a free meeting to review their affairs.
If you need help with your will, naturally, the next step is to open a conversation. Email or call, and we’ll be delighted to discuss your needs.
The content of this article is intended as general information only and does not constitute legal advice.