Variation into a trust or what ?

[drfhm]

I am about to inherit a large sum which i neither want or need , would anyone know if its possible for me to have it directed to my adult Nephews with someone else making the decisions as to when they receive the money as i would prefer them to use it for something of use such as a deposits on property rather than waste it which i feel they would if they had it now .

The estate is all cash and below the threshold so there was no inheritance or other tax's to be paid on the estate and i am the sole beneficiary however if i keep it safe until an appropriate time to give it to them it would still be deemed as mine and if i were to give it to them as a gift it would be treated as mine for the next 7 years .

Ideally i would like to pass it on to another relative to deal with so that i had no further involvement .

Any advice or suggestions would be much appreciated .

[Amethyst]

Re: Variation into a trust or what ?

I believe you can do a deed of variation, basically changing the bequest in the original will to state that your inheritance will pass to your nephews - and you can add any caveats into that - such as when they reach the age of 21 etc. You would need a solicitor to assist you - but I believe this will mean the inheritance will never become yours in the first place and be treated as if the original will asked for the inheritance to go to your nephews.

I do not know if you can do the same to a third party instructing them to make decisions on when the inheritance would pass - particularly as you already have a strong idea when that should be.

You will need formal advice on that though.

[des8]

Re: Variation into a trust or what ?

Further to Amethyst's post you might find this link useful http://www.ts-p.co.uk/uploaded/publi..._Variation.pdf

[drfhm]

Re: Variation into a trust or what ?

Thank you des , have spent a two weeks reading up on Deeds of Variations including the link you kindly offered , it one of about 30 bookmarked websites I've saved . Im still reading up on Amethysts interesting suggestion of Caveats , its something i had no knowledge on before she mentioned it .

[drfhm]

Re: Variation into a trust or what ?

Thank you Amethyst I have done some reading although nothing i read has been anything more than basic information , all i feel confident about is that a Deed of Variation would remove the money from being mine so that my Nephews became the beneficiaries . There was no will i understand it simply allows a change to the rules as to who is the legal beneficiary which would answer part of my concerns . I still feel i have a duty to do the best i can for the sake of my Nephews even if they knew my intentions and felt differently , i have to do what i believe to be right .

Your suggestion to do Deed of Variation and if it were possible to add a caveat to the effect that a person of my choosing had control over when the money was to be handed over would certainly be an ideal solution however the more i read about Caveats the more confusing it becomes ,seems a caveat has to be registered with a probate office which would suggest it was still connected with myself or my estate in some way .

My nephews are in their late 20s and for them to receive money at this point in their lives considering their current lifestyle and relationships would be a disaster .

Looked at trusts and a discretionary one with a trusted responsible relative or person acting as trustees would achieve what i would want but i cant find answers to outstanding questions such as , Who would be the person creating the trust ? Although my Nephews would become the beneficiaries , who would be the settlor and in practical terms where would the money sit until the time to release it ? the tax on the trust would be different so would a special bank account be necessary that would deduct the correct amount from source on any interest paid so that an annual return was not necessary ?

I would be happy to consult a solicitor and instruct them to do whatever is necessary however I'm abroad at the moment and hoping that by the time i return to the UK to have a plan of action , until then this is causing me a great deal of sleepless nights which is why i thought of asking for advice here however i don't wish to take advantage of the aims and usefulness of a forum such as this .

[Amethyst]

Re: Variation into a trust or what ?

Ah thanks Des xx

[seduraed]

Re: Variation into a trust or what ?

If you want to protect the money talk to a local solicitor and set up a discretionary trust with your nephews as beneficiaries. With this sort of trust the trustees can give the money to the beneficiaries for"extra comforts". Because there is no requirement on the trustees to payout at all the money is not counted as capital for benefit nor is the money received counted as income (or at least that used to be the case when I was a beneficiary). This would with you and another trusted person as trustees that the money can be given as presents or to help buy things for the house etc.

[drfhm]

Re: Variation into a trust or what ?

Thank you Seduraed however there was no will so no trust existed to do a variation into so i would be the one to set up a trust prior to doing a deed of variation directing the money into it and i wold become the Settlor so would still have involvement . If the trust were already in existence then i think i could direct the inheritance into it and as you point out it would met all the criteria . From what i can make out discretionary trusts are set up by someone living to either direct assets their own assets into at the time of after their own deaths .

[Amethyst]

Re: Variation into a trust or what ?

I don't know how it works in cases of intestacy, you can disclaim or vary but I'm not so sure about the caveats. You really need to talk to a solicitor, and possibly your accountant if it is the tax or care costs side you are concerned about (think you mentioned 7 years) as there may be other ways around that.

[drfhm]

Re: Variation into a trust or what ?

There is no reason for me to ever consider care costs , my only concern is that if the inheritance isn't passed on correctly and something happened to me within 7 years some if not all it would be added back to my own estate which is why once i have passed it on someway i prefer not to have any further connection to it .

[des8]

Re: Variation into a trust or what ?

As advised you should speak to a solicitor/accountant.
I think you may first set up a discretionary trust (as per Seduraed) with perhaps three trustees (2 family members/friends and 1 solicitor?) and then make a deed of variation passing the legacy to the trust

The deed can be made up to two years after the testators death, but I think it needs to be signed by all beneficiaries

[SPQR]

Re: Variation into a trust or what ?

Yes you should speak to a solicitor.

But you may find the following link helpful: http://uk.practicallaw.com/6-386-413...=privateclient

Basically a deed of variation can be used to change a benefit received under the intestacy rules.

Also, it can avoid any furtherinheritance tax / capital gains tax, provided that the deed of variation meets the following requirements:
- in writing.
- made by the individual who benefits or would benefit under the will or intestacy rules and who is giving up that benefit.
- made within two years of the deceased's death.
- indicate clearly: which disposition (that is, the benefit inherited) is the subject of the variation; and that the variation changes the destination of the disposition (that is, redirects it so that another beneficiary benefits from it).
- contain a statement of intent specifying that the beneficiary wants section 142(1) of IHTA 1984 and section 62(6) of TCGA 1992 to apply, that is, he intends that the variation is treated as made by the deceased.
- not be made for consideration in money or money's worth from a source outside the estate.