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Deed of variation

including wills and probate
Jan001
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Deed of variation

#351160

Postby Jan001 » October 27th, 2020, 8:52 pm

When my stepfather died in 1989, I remember signing something that varied his Will to leave part of the value of his and my mum’s house to be shared between his two daughters and myself.

Skip forward to today, and my mum is now living in a care home and the time has come to sell her house so I can use the capital to pay the care home fees. I have POA as my mum has dementia and no longer has capacity to make decisions.

I had the house valued today with a view to setting the ball rolling, but have just realised that presumably when the house is sold, the part of the value of the house that was left to be shared between my stepsisters and me will have to be paid out to us, leaving the remainder to be used for mum’s fees - is that correct?

Do we count as joint owners with my mum, meaning we’ll all have to be signatories to the sale? (They won’t object - the three of us discussed it and agreed to using the house to pay the fees before mum went into the care home, but it might complicate matters if we all have to sign the contract of sale, especially as one sister lives in the US.)

How would I get a copy of the terms of the deed of variation from 1989? It’s so long ago, I really can’t remember what the arrangement was.

Are there any tax implications that I need to think about?

I’ve tried to find more information from Mr Google but all I can find is the definition of a deed of variation, and not the practicalities of carrying one out.

Thanks in advance.

scrumpyjack
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Re: Deed of variation

#351165

Postby scrumpyjack » October 27th, 2020, 9:08 pm

If the deed of variation does not change the IHT it does not need to be given to HMRC nor to anyone else.

I would expect the solicitors involved in the estate would have a copy (presumably they prepared it) and that you and his daughters were given copies. Perhaps they still have theirs.

Gersemi
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Re: Deed of variation

#351417

Postby Gersemi » October 28th, 2020, 4:56 pm

Jan001 wrote:
Are there any tax implications that I need to think about?

Thanks in advance.


You and your step sisters will have a capital gain calculated on your shares of the increase in value of the house since your step father died. The capital gains tax allowance of £12,300 can be set against this (less any other gains you have made in the year.

hiriskpaul
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Re: Deed of variation

#353113

Postby hiriskpaul » November 3rd, 2020, 5:51 pm

Jan001 wrote:When my stepfather died in 1989, I remember signing something that varied his Will to leave part of the value of his and my mum’s house to be shared between his two daughters and myself.

Skip forward to today, and my mum is now living in a care home and the time has come to sell her house so I can use the capital to pay the care home fees. I have POA as my mum has dementia and no longer has capacity to make decisions.

I had the house valued today with a view to setting the ball rolling, but have just realised that presumably when the house is sold, the part of the value of the house that was left to be shared between my stepsisters and me will have to be paid out to us, leaving the remainder to be used for mum’s fees - is that correct?

Do we count as joint owners with my mum, meaning we’ll all have to be signatories to the sale? (They won’t object - the three of us discussed it and agreed to using the house to pay the fees before mum went into the care home, but it might complicate matters if we all have to sign the contract of sale, especially as one sister lives in the US.)

How would I get a copy of the terms of the deed of variation from 1989? It’s so long ago, I really can’t remember what the arrangement was.

Are there any tax implications that I need to think about?

I’ve tried to find more information from Mr Google but all I can find is the definition of a deed of variation, and not the practicalities of carrying one out.

Thanks in advance.

Check with land registry who owns what percentage of the house. You can do this on-line for a few pounds https://www.gov.uk/search-property-info ... d-registry

Terms of the deed of variation may not matter as the house should have been properly transferred into your names.

There are certainly tax implications here. CGT has already been mentioned and to calculate this you will need to know the valuation at the date of your stepfather's death. Also, if any of you have bought a property since April 2016 you should have paid higher stamp duty than normal because of your part ownership of this house. Did you?

Inheritance tax may be affected as well. If part of the house was transferred to you on your stepfather's death, your mother's estate may not be able to claim your stepfather's full resident nil rate band after your mother dies. Not sure how this works in these circumstances though, so could be wrong. Not immediately important, but something to consider when sorting out your mother's house - check and keep any paperwork you find on the administration of your stepfather's estate.

hiriskpaul
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Re: Deed of variation

#353141

Postby hiriskpaul » November 3rd, 2020, 7:36 pm

Just had another thought. The deed of variation may have been one that granted a life interest in the stepfather's share of the property to your mother, with it reverting to you on your mother's death. Your mother may be what is known as a "Life Tenant" of the will trust and have the right to live in the house. If this is the case then no CGT will be payable on the sale and your mother may be entitled to the income generated on capital from the part of the property left in trust.

Whether part of the property has been left in trust should be clear from the Land Registry details. If part of the property is in trust, then you really do need the deed of variation as it will contain the precise details of the trust.


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