I am dealing with an estate where husband died leaving everything to his wife.
The house was held as tenants in common but wife does not want the half share of the property and would like to set up a deed of variation to set up a property protection trust for the benefit of her children.
Is this possible?
Thanks
Yes. A DoV could be executed within two years of death by the surviving spouse to redirect her 50% property inheritance to an appropriate trust.
The surviving spouse would be the settlor for CGT and income tax purposes.
For IHT the deceased is the settlor.
If the trust set up gives the surviving spouse a life interest, and assuming reading back for IHT, then the life interest will be an IPDI and thus on surviving spouse’s death the trust interest will be subject to IHT as part of the estate.
Alternatively, a discretionary trust could be considered.
Malcolm Finney
Bear in mind the statutory fictions of a deed of variation (for IHT/CGT) do not apply to the rules applicable to care costs. Under those rules she is still making a gift.
You need to be sure of the point of the trust/variation, particularly considering the extension of the trust register to (inter alia) all trusts of this kind next year and the additional admin that will involve.
Andrew Goodman
Osborne Clarke LLP
Thank you, the information has been most helpful
Thank you. The information has been helpful