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Legal Terms - deed of variation (deed of family arrangement)
a deed whereby the beneficiary of a will or an intestacy transfers the gift to another individual (who could or might not be an estate beneficiary). The beneficiary giving up his interest in the redirection does not count as a gift for inheritance tax or capital gains tax purposes, as long as it is completed within two years of the decedent's passing and all legal requirements are met (Inheritance Tax Act 1984 s. 142; Taxation of Chargeable Gains Act 1992 s. 62 (6)). A deed of variation was declared to be invalid in Soutter's Executry v. IRC [2002] STC (SCD], when 385 executors sought to modify a trust that had been established at the time of the decedent's death but had stopped prior to the deed's date. If a deed of variation is made for consideration other than consideration consisting of another variation, it is ineffective for tax reasons. (Taxation of Chargeable Gains Act of 1992 s. 142(3); Inheritance Tax Act s.
62 (8). A variation was deemed ineffectual under s. 142(3) in Lau (Executor of Lau (dead)) v. Revenue and Customs Commissioners [2009] STC (SOD) 352, as the beneficiary requesting the variation received a payment of £1 million from another beneficiary, which was taken into account as consideration for the change.
a deed whereby the beneficiary of a will or an intestacy transfers the gift to another individual (who could or might not be an estate beneficiary). The beneficiary giving up his interest in the redirection does not count as a gift for inheritance tax or capital gains tax purposes, as long as it is completed within two years of the decedent's passing and all legal requirements are met (Inheritance Tax Act 1984 s. 142; Taxation of Chargeable Gains Act 1992 s. 62 (6)). A deed of variation was declared to be invalid in Soutter's Executry v. IRC [2002] STC (SCD], when 385 executors sought to modify a trust that had been established at the time of the decedent's death but had stopped prior to the deed's date. If a deed of variation is made for consideration other than consideration consisting of another variation, it is ineffective for tax reasons. (Taxation of Chargeable Gains Act of 1992 s. 142(3); Inheritance Tax Act s.
62 (8). A variation was deemed ineffectual under s. 142(3) in Lau (Executor of Lau (dead)) v. Revenue and Customs Commissioners [2009] STC (SOD) 352, as the beneficiary requesting the variation received a payment of £1 million from another beneficiary, which was taken into account as consideration for the change.
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