Wills for Widows, Will for Widowers
Alder Wills

Widows & Widowers

Deeds of variation and claiming unused tax free allowance

Currently the law provides a very useful mechanism for beneficiaries of a Will to go back and change a Will retrospectively. That is, within 2 years of the date of death, you can effectively go back and re-write the Will to pass the estate elsewhere.

It is achieved by creating an "Instrument of Variation" (IOV or sometime also called a Deed of Variation, DOV). In it you specify that rather than the gift going to yourself it should go elsewhere - to a particular person, or people, to perhaps to a Trust (perhaps with yourself as one of the beneficiaries of the Trust). An IOV CANNOT take a gift away from someone who wants to keep it - and normally you do not create one for someone who is unable to make decisions for themselves (such as a minor child or an adult who is not mentally capable)

Why bother? Why not just pass the gift directly to someone else? - Mainly because of Tax. The IOV means that the gift is treated as having come directly from the deceased and not via you - giving potential for tax planning and general protection of family assets. By exploiting the full potential of the Inheritance Tax Nil Rate Band in certain circumstances a family can save over £200,000 in future tax bills.

An IOV can be created when someone is Intestate (i.e. died without a Will). Of course, it is much better for all concerned to have made a proper Will in the first place, thereby avoiding the expense and bother of creating an IOV. Indeed, with the major political parties all having talked about closing this tax loophole no-one can rely on it being available in the future.

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