Dod1010 wrote:Gengulphus wrote:No, actually we're not. A DoV can only redirect assets in ways that could be done by the original beneficiaries inheriting and then making gifts from their bequests - all it actually varies is the tax consequences.
It need not be just as simple as saying 'x has been left say £100,000 by the deceased but x has said he/she does not want it and if he/she gets it she will give it to y' On the whole passing the inheritance to y directly might be more efficient tax wise. Actually it is incorrect to say that a Deed of Variation 'can only redirect assets.......... bequests'
But the Deed of Variation does
not pass the inheritance directly to y. If it did, it would automatically affect not just IHT and CGT, but also everything else - things like 'intentional deprivation of assets', bankruptcy, divorce settlements, etc.
What it does (provided it actually states that the relevant sections of the taxation Acts apply) is cause IHT and CGT to be calculated
as if the inheritance had gone directly to y (on the condition that it does actually go to y). For all other purposes, it's gone to x and then immediately been given to y by x.
Dod1010 wrote:If any residuary beneficiary agrees to a reduction in his/her share ...
Well, any beneficiary (not just residuary ones) can refuse to accept part or all of a bequest - but that's a disclaimer, not a Deed of Variation. A Deed of Variation always has to identify the asset being redirected and who it's redirected to, and be signed by all those entitled to the asset under the will, and its effect only differs from them simply accepting the asset and making a gift of it in that IHT and CGT are calculated differently.
Dod1010 wrote:... and it is not affecting other legacies, the executors could introduce a whole raft of new beneficiaries.
Really? Where do you get that from?
As far as I am aware, executors only have the power to introduce new beneficiaries if something says they do. It would be possible to write a will that included such a power, and in the case of a will that was going to create a long-lasting trust, I can imagine it being done to provide flexibility for dealing with future events. And I imagine one could write a Deed of Variation that redirected a bequest one was due to receive to "a person of the executor's choice" or similar wording. But in the absence of suitable wording in the will or a Deed of Variation, no, executors don't have a power to introduce new beneficiaries - and suitable wording in a Deed of Variation can only create a beneficiary for the redirected asset, not more generally.
As for disclaimed bequests, they fall into the residue of the estate and are distributed among the residuary beneficiaries according to the will. (With the exception that if a residuary beneficiary disclaims their share of the residue, I believe the residue is distributed according to the will except that that person is excluded from the residuary beneficiaries. And no, I don't know what happens if every residuary beneficiary disclaims their share of the residue!)
If anyone wants to check up on the above, there's a lot of material (far too much for most, I would guess!) in the links in
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm35000. For example,
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm35161 says what happens to a disclaimed bequest.
Gengulphus