You may not want to keep a gift of property or money that someone has left to you in a Will. You can either disclaim the gift or you can enter into a deed of variation.
You can disclaim the gift in writing. If you do this then the gift will be dealt with in accordance with the provisions of the Will. So for example if Mr Smith left the sum of £100,000 to his son and his remaining estate to his daughter and the son disclaimed the gift then the £100,000 would pass to the daughter along with the remaining estate. This is just an example and you have to look carefully at the Will in order to see what will happen to the disclaimed gift. By way of a further example if Mr Smith left his estate to be divided equally among you and his surviving nieces and nephews and again you disclaimed the gift then the estate would pass to the surviving nieces and nephews only.
If rather than having the gift dealt with in accordance with the provisions of the Will you actually want to direct the gift elsewhere yourself then you need to enter into a deed of variation. So using the same examples as before if the son wished the £100,000 to pass to his children then he and the executors of the Will would need to enter into a deed of variation cancelling the gift to the son and making a gift instead to the children. Similarly if in the second example you wished your share of Mr Smith’s estate to pass to your goddaughter then you and the executors of the Will would need to enter into a deed of variation gifting your share of the estate to your goddaughter.
In each instance the disclaimer or deed of variation has to be completed within 2 years of the death of the person whose Will made the relevant gifts (called the Testator).. If it is done within the 2 year period then the gift is said to be a gift from the Testator and will not affect the estate of the person who has made the disclaimer or deed of variation.
Using a different example if you inherit £300,000 from a distant cousin and you give that money away to your friends and family and die within 7 years of making those gifts then upon your death the value of those gifts will be added to the value of your remaining estate and may make your estate chargeable to inheritance tax. If however you make those gifts under a deed of variation then they are gifts from the Testator not from you and if you then die within 7 years of making the deed of variation the gifts will not be added to your estate for the purposes of calculating inheritance tax.
There are many reasons why someone would wish to disclaim a gift or enter into a deed of variation. This may be useful for example where an elderly person inherits a large sum of money or a property from a deceased relative. The elderly person may have no need for the large sum of money or the property as they have sufficient assets of their own to maintain their standard of living.
If you would like any advices about this matter or any others then please do contact us on enquiry@dixonstewart.com