Deed of Variation to create IPDI

I’m starting to doubt myself.

Wife dies within last two years leaving everything to husband.

Husband concerned about impact of care fees on his estate.

Can he vary wife’s will and retrospectively sever joint tenancy to leave her share of the property to an IPDI trust?

Can Local Authority challenge it? My concern I suppose it that it’s the husband taking action here.

Many thanks
Deborah Wise

Yes, for IHT purposes the husband can vary the dispositions of his late wife’s estate to settle the share of the property that passed to him by survivorship upon an IPDI for himself.

However, most local authorities will see this as intentional deprivation, treating the property as remaining wholly within his estate.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Yes. It will be deprivation of assets so the LA could challenge

Simon Northcott

Yes, he can prepare a deed of variation, subject to the normal rules. But apart from IHT & CGT , for all other purposes, it will be treated as a gift from him (to the IPDI). So, it will all be down to if the local authority treat that ‘gift’ as deliberate deprivation.
That will be case and facts specific, with timing and health also being a factor.

Kamlesh Samji
KRS Estate Planning

It seems highly likely that the Deprivation of capital will apply post the DoV.

Whilst a DoV may be useful due to the back-dating effect for IHT/CGT nevertheless the husband by executing the DoV has made a gift of assets he possessed which seems to most likely give rise to a Deprivation of capital argument.

In such a case the Deprivation rule would override the exemption/disregard of the life interest created under the DoV.

Malcolm Finney

Thank you all for clarifying. I will put this to him and then the decision is his to make.

Deborah Wise