Deed of Variation discretionary trust


(Kirsty) #1

I have a client who would like to bring an end to a discretionary trust set up in their late spouse’s will. The spouse had dementia and their pre 2006 will was not changed. They do not have more than the combined NRB between them. They would like to do a deed of variation to just negate the trust entirely and I think this is possible except one potential beneficiary has died. The class is closed and all other potential beneficiaries are alive and willing to sign a DOV. Can anyone offer any other perspectives on whether this is the best way to go about it please?

Kirsty Cartwright
St Helens Law


(Alex Stanier) #2

When did their late spouse die?

Alex Stanier
Allan Janes LLP


(jbennell) #3

If the surviving spouse is a beneficiary the Trustees could simply appoint the assets out of the trust to him/her. If you are still within two years of the death that would attract spouse exemption .

Mrs J E Bennell

RLK SOLICITORS LTD


(andrew.goodman) #4

Can the executors not just appoint out the assets? If there has not been any intervening IinP, this would be read back under s.144 (rather than s.142 for a DOV).

Andrew Goodman
Osborne Clarke LLP


(Kirsty) #5

Thank you. Do you know if the appointment needs to specifically state the section which applies please as the precedent I have does not?

Kirsty Cartwright
St Helens Law


(Kirsty) #6

Thanks everyone. If on 2nd death we wanted to claim the 1st spouse’s unused nil rate band in full (as spouse exemption wasn’t claimed on the initial grant application) how would we evidence this? Many thanks again!

Kirsty Cartwright
St Helens Law


(andrew.goodman) #7
  1. No reference required (as it would be for a DoV)
  2. I would keep a copy of the deed of appointment. That should be enough. It may also be sensible to file a corrective, even though it is probably not required.

Andrew Goodman
Osborne Clarke LLP


(Kirsty) #8

Thanks Andrew. I was debating a corrective but thought I may be wasting HMRC’s time as no actual tax due. We could certainly send them a copy of the deed when administering second estate which hopefully would do the trick.

Kirsty Cartwright
St Helens Law