The learning objectives for this video

• Learn what a deed of variation is, and the terminology used when discussing them.
• When and for whom a deed of variation might be used for IHT planning.

Speakers

Nick Priest

Partner, Downing

Marcia Banner

Technical Connection

Receiving an inheritance is often the prompt for individuals to make lifetime gifts, whether for IHT planning reasons or simply because there is a desire to share wealth and/or make provision for later generations.  

However, two of the most common impediments to making outright gifts are the donor’s continued desire for control over and access to the gifted funds.

While control can be achieved by making a gift to a discretionary trust; making a gift that is both inheritance tax efficient while allowing continued access for the donor will require navigation of the gift with reservation provisions (which treat property as remaining part of the donor’s estate if he can continue to benefit from it).

When it comes to planning with cash and investments generally, there are various options for overcoming these provisions however many will have limitations or drawbacks such as inflexibility and/or limited IHT-efficiency or the investor may have a cautious approach to investing/lack of investment experience or liquidity concerns.

If, however, the gift is of funds or assets that have been recently inherited, a deed of variation offers an alternative – and potentially superior – solution. 

In simple terms, a deed of variation is just a way of making a gift of inherited money or assets.  

In this video, Marcia helps to unpack this by providing examples of when and for whom a deed of variation may be used in estate planning.

Important notice

Opinions expressed represent the views of the author at the time of publication, are subject to change, and should not be interpreted as investment or tax advice.

Important notice: This video is for investment professionals only. This video is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. No reliance should be made on this content to inform any investment of tax planning decision.

This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. The explanation of all of the tax rules set out have been written in accordance with our understanding of the law and interpretation of it at the time of publication.

Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.