Rethinking Your Inheritance.
Have you received an inheritance that’s prompted concern about your future inheritance tax (IHT) exposure, but you’re reluctant to give the assets away outright?
At Vault Private Client, our trust and probate solicitors offer tailored advice on Deeds of Variation (DOVs) – a strategic post-death planning tool that allows you to redirect all or part of your inheritance, either to an individual or into a discretionary trust.
DOVs are particularly beneficial for those with existing IHT liabilities, but they can also offer advantages to anyone inheriting from an estate subject to IHT. Importantly, this opportunity is only available within two years of the date of death.
For example, if parents due to inherit over £1 million from a deceased relative already have substantial estates, they may choose to redirect their inheritance to their children. This avoids inflating their estates and helps reduce future IHT exposure – all without triggering the 7-year gifting rule. With a DOV, it’s as if the deceased made the gift directly.
Structure, Benefits & Tax Planning.
A DOV allows a beneficiary to pass their inheritance to others, whether individuals who weren’t named in the will, or into a discretionary trust, without the inheritance being classed as a lifetime gift. This avoids IHT charges, 7-year survival rules, and the need to report it as a chargeable lifetime transfer.
Common reasons to use a DOV include:
- Intergenerational estate planning
- Providing for individuals excluded by the will or intestacy rules
- Reducing IHT or CGT exposure by passing assets to exempt beneficiaries
- Securing the lower 36% IHT rate by gifting 10 %+ of the estate to charity
- Creating a discretionary trust using the deceased’s available nil rate bands
If you’d prefer not to pass your inheritance outright, our solicitors can help you use a DOV to establish a discretionary trust. You can still benefit as a potential discretionary beneficiary without owning the assets for IHT purposes.
DOVs also come with tax considerations:
- IHT: Discretionary trusts are taxed under the relevant property regime, with potential charges on 10-year anniversaries and some distributions.
- CGT: No disposal is deemed to occur when redirecting assets under a DOV; the new beneficiary or trust inherits at probate value.
- Income Tax: The variation is treated as occurring at the date the trust is set up, not the date of death. We recommend that beneficiaries take tax advice from our experts to understand the ongoing implications.
Our holistic, proactive approach ensures you don’t miss the window to create long-term tax advantages. At Vault, we’re here to guide you through every step – from your personal estate planning to managing inheritance outcomes, making sure your intentions are fulfilled and your loved ones are protected.
THE BEST IN THE BUSINESS.
Our probate and estate planning solicitors are experts in Deeds of Variation and inheritance tax strategy.
Russell Kaminski
Partner and Head of Private Client
Lucy Cresswell
Associate
Alison Rocca
Partner
Jason Stanley
Partner
Holly Greensmith
Solicitor
Matt Fleetwood
Group Chief Executive & Founder
Mark Dawson
Group Managing Director
Amanda McAlister
Head of Group Consumer Brands
Because We Are Here To Help You
Maximise tax benefits and pass on wealth efficiently with a strategic Deed of Variation.
“We had a very good meeting yesterday with Lucy Cresswell. She set out their plan of action and both ### and I came away from your offices a lot happier.”
Probate Client
